Correlation Between Citigroup and UBS Group

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

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

Diversification Opportunities for Citigroup and UBS Group

0.77

Correlation Coefficient

Citigroup  UBS Group

Poor diversification

The 3 months correlation between Citigroup and UBS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Citigroup i.e., Citigroup and UBS Group go up and down completely randomly.

Pair Corralation between Citigroup and UBS Group

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the UBS Group. In addition to that, Citigroup is 1.11 times more volatile than UBS Group AG. It trades about -0.07 of its total potential returns per unit of risk. UBS Group AG is currently generating about -0.06 per unit of volatility. If you would invest  3,198  in UBS Group AG on January 12, 2025 and sell it today you would lose (354.00) from holding UBS Group AG or give up 11.07% of portfolio value over 90 days.

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

Citigroup  vs.  UBS Group AG

Citigroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

UBS Group AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Citigroup and UBS Group

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

The idea behind Citigroup and UBS Group AG 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .