Correlation Between Citigroup and Transport

Can any of the company-specific risk be diversified away by investing in both Citigroup and Transport at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Transport and Industry, you can compare the effects of market volatilities on Citigroup and Transport and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Transport.

Diversification Opportunities for Citigroup and Transport

0.86

Correlation Coefficient

Citigroup  Transport

Very poor diversification

The 3 months correlation between Citigroup and Transport is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of Citigroup i.e., Citigroup and Transport go up and down completely randomly.

Pair Corralation between Citigroup and Transport

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.45 times less return on investment than Transport. But when comparing it to its historical volatility, Citigroup is 2.89 times less risky than Transport. It trades about 0.26 of its potential returns per unit of risk. Transport and Industry is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  173,000  in Transport and Industry on May 11, 2025 and sell it today you would earn a total of  120,000  from holding Transport and Industry or generate 69.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.38%
Values	Daily Returns

Citigroup  vs.  Transport and Industry

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Transport and Industry

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transport and Industry are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Transport displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Transport

The main advantage of trading using opposite Citigroup and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Transport can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Transport will offset losses from the drop in Transport's long position.

The idea behind Citigroup and Transport and Industry pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..