Correlation Between CITIGROUP CDR and Capital Power

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

By analyzing existing cross correlation between CITIGROUP CDR and Capital Power, you can compare the effects of market volatilities on CITIGROUP CDR and Capital Power 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 CDR with a short position of Capital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIGROUP CDR and Capital Power.

Diversification Opportunities for CITIGROUP CDR and Capital Power

0.86

Correlation Coefficient

CITIGROUP CDR  Capital Power

Very poor diversification

The 3 months correlation between CITIGROUP and Capital is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CITIGROUP CDR and Capital Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Power and CITIGROUP CDR 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 CDR are associated (or correlated) with Capital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Power has no effect on the direction of CITIGROUP CDR i.e., CITIGROUP CDR and Capital Power go up and down completely randomly.

Pair Corralation between CITIGROUP CDR and Capital Power

Assuming the 90 days trading horizon CITIGROUP CDR is expected to generate 0.83 times more return on investment than Capital Power. However, CITIGROUP CDR is 1.21 times less risky than Capital Power. It trades about 0.24 of its potential returns per unit of risk. Capital Power is currently generating about 0.14 per unit of risk. If you would invest  3,155  in CITIGROUP CDR on May 14, 2025 and sell it today you would earn a total of  710.00  from holding CITIGROUP CDR or generate 22.5% return on investment over 90 days.

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

CITIGROUP CDR  vs.  Capital Power

CITIGROUP CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, CITIGROUP CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capital Power

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Power are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Capital Power displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIGROUP CDR and Capital Power

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

The idea behind CITIGROUP CDR and Capital Power 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.