Correlation Between Citigroup and Torm PLC

Can any of the company-specific risk be diversified away by investing in both Citigroup and Torm PLC 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 Torm PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Torm PLC Class, you can compare the effects of market volatilities on Citigroup and Torm PLC 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 Torm PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Torm PLC.

Diversification Opportunities for Citigroup and Torm PLC

0.66

Correlation Coefficient

Citigroup  Torm PLC

Poor diversification

The 3 months correlation between Citigroup and Torm is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Torm PLC Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torm PLC Class 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 Torm PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torm PLC Class has no effect on the direction of Citigroup i.e., Citigroup and Torm PLC go up and down completely randomly.

Pair Corralation between Citigroup and Torm PLC

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.63 times more return on investment than Torm PLC. However, Citigroup is 1.59 times less risky than Torm PLC. It trades about 0.29 of its potential returns per unit of risk. Torm PLC Class is currently generating about 0.08 per unit of risk. If you would invest  7,024  in Citigroup on May 3, 2025 and sell it today you would earn a total of  2,159  from holding Citigroup or generate 30.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Torm PLC Class

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Torm PLC Class

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Torm PLC Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Torm PLC may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Citigroup and Torm PLC

The main advantage of trading using opposite Citigroup and Torm PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Torm PLC 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 Torm PLC will offset losses from the drop in Torm PLC's long position.

The idea behind Citigroup and Torm PLC Class 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.