Correlation Between Citigroup and Lands End

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

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

Diversification Opportunities for Citigroup and Lands End

0.58

Correlation Coefficient

Citigroup  Lands End

Very weak diversification

The 3 months correlation between Citigroup and Lands is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Citigroup i.e., Citigroup and Lands End go up and down completely randomly.

Pair Corralation between Citigroup and Lands End

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.09 times less return on investment than Lands End. But when comparing it to its historical volatility, Citigroup is 3.07 times less risky than Lands End. It trades about 0.13 of its potential returns per unit of risk. Lands End is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  929.00  in Lands End on February 2, 2024 and sell it today you would earn a total of  428.00  from holding Lands End or generate 46.07% return on investment over 90 days.

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

Citigroup  vs.  Lands End

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Lands End

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lands End exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Lands End

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

The idea behind Citigroup and Lands End 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.