Correlation Between Citigroup and Dana Large

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

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

Diversification Opportunities for Citigroup and Dana Large

0.97

Correlation Coefficient

Citigroup  Dana Large

Almost no diversification

The 3 months correlation between Citigroup and Dana is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Dana Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Large Cap 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 Dana Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Large Cap has no effect on the direction of Citigroup i.e., Citigroup and Dana Large go up and down completely randomly.

Pair Corralation between Citigroup and Dana Large

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Dana Large. In addition to that, Citigroup is 1.41 times more volatile than Dana Large Cap. It trades about -0.04 of its total potential returns per unit of risk. Dana Large Cap is currently generating about -0.02 per unit of volatility. If you would invest  2,261  in Dana Large Cap on February 15, 2025 and sell it today you would lose (86.00) from holding Dana Large Cap or give up 3.8% of portfolio value over 90 days.

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

Citigroup  vs.  Dana Large Cap

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 latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Dana Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dana Large 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 Dana Large

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

The idea behind Citigroup and Dana Large Cap 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.