Correlation Between Citigroup and Blackrock 40/60

Can any of the company-specific risk be diversified away by investing in both Citigroup and Blackrock 40/60 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 Blackrock 40/60 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Blackrock 4060 Target, you can compare the effects of market volatilities on Citigroup and Blackrock 40/60 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 Blackrock 40/60. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Blackrock 40/60.

Diversification Opportunities for Citigroup and Blackrock 40/60

0.38

Correlation Coefficient

Citigroup  Blackrock 40/60

Weak diversification

The 3 months correlation between Citigroup and Blackrock is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Blackrock 4060 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock 4060 Target 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 Blackrock 40/60. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock 4060 Target has no effect on the direction of Citigroup i.e., Citigroup and Blackrock 40/60 go up and down completely randomly.

Pair Corralation between Citigroup and Blackrock 40/60

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.78 times more return on investment than Blackrock 40/60. However, Citigroup is 2.78 times more volatile than Blackrock 4060 Target. It trades about 0.0 of its potential returns per unit of risk. Blackrock 4060 Target is currently generating about -0.06 per unit of risk. If you would invest  6,173  in Citigroup on February 6, 2024 and sell it today you would lose (21.00) from holding Citigroup or give up 0.34% of portfolio value over 90 days.

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

Citigroup  vs.  Blackrock 4060 Target

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Blackrock 4060 Target

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock 4060 Target are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock 40/60 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 and Blackrock 40/60

The main advantage of trading using opposite Citigroup and Blackrock 40/60 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Blackrock 40/60 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 Blackrock 40/60 will offset losses from the drop in Blackrock 40/60's long position.

The idea behind Citigroup and Blackrock 4060 Target 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.