Correlation Between Citigroup and SIMON

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

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

Diversification Opportunities for Citigroup and SIMON

-0.34

Correlation Coefficient

Citigroup  SIMON

Very good diversification

The 3 months correlation between Citigroup and SIMON is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SIMON PROPERTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PROPERTY GROUP 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PROPERTY GROUP has no effect on the direction of Citigroup i.e., Citigroup and SIMON go up and down completely randomly.

Pair Corralation between Citigroup and SIMON

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.7 times more return on investment than SIMON. However, Citigroup is 1.7 times more volatile than SIMON PROPERTY GROUP. It trades about 0.25 of its potential returns per unit of risk. SIMON PROPERTY GROUP is currently generating about -0.07 per unit of risk. If you would invest  7,480  in Citigroup on May 14, 2025 and sell it today you would earn a total of  1,751  from holding Citigroup or generate 23.41% return on investment over 90 days.

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

Citigroup  vs.  SIMON PROPERTY GROUP

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

SIMON PROPERTY GROUP

Risk-Adjusted Performance

Weakest

Over the last 90 days SIMON PROPERTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and SIMON

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

The idea behind Citigroup and SIMON PROPERTY GROUP 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.