Correlation Between CITIGROUP CDR and Financial

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

By analyzing existing cross correlation between CITIGROUP CDR and Financial 15 Split, you can compare the effects of market volatilities on CITIGROUP CDR and Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIGROUP CDR and Financial.

Diversification Opportunities for CITIGROUP CDR and Financial

0.91

Correlation Coefficient

CITIGROUP CDR  Financial

Almost no diversification

The 3 months correlation between CITIGROUP and Financial is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CITIGROUP CDR and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of CITIGROUP CDR i.e., CITIGROUP CDR and Financial go up and down completely randomly.

Pair Corralation between CITIGROUP CDR and Financial

Assuming the 90 days trading horizon CITIGROUP CDR is expected to generate 5.54 times more return on investment than Financial. However, CITIGROUP CDR is 5.54 times more volatile than Financial 15 Split. It trades about 0.28 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.19 per unit of risk. If you would invest  2,955  in CITIGROUP CDR on May 3, 2025 and sell it today you would earn a total of  888.00  from holding CITIGROUP CDR or generate 30.05% return on investment over 90 days.

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

CITIGROUP CDR  vs.  Financial 15 Split

CITIGROUP CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, CITIGROUP CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Financial 15 Split

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CITIGROUP CDR and Financial

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

The idea behind CITIGROUP CDR and Financial 15 Split 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.