Correlation Between Citigroup and Fabrinet

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

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

Diversification Opportunities for Citigroup and Fabrinet

0.57

Correlation Coefficient

Citigroup  Fabrinet

Very weak diversification

The 3 months correlation between Citigroup and Fabrinet is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet 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 Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Citigroup i.e., Citigroup and Fabrinet go up and down completely randomly.

Pair Corralation between Citigroup and Fabrinet

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Fabrinet. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.57 times less risky than Fabrinet. The stock trades about -0.06 of its potential returns per unit of risk. The Fabrinet is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  36,666  in Fabrinet on July 26, 2025 and sell it today you would earn a total of  4,833  from holding Fabrinet or generate 13.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Citigroup  vs.  Fabrinet

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fabrinet

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fabrinet are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Fabrinet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Fabrinet

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

The idea behind Citigroup and Fabrinet 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.