Correlation Between Citigroup and 126650CU2

Can any of the company-specific risk be diversified away by investing in both Citigroup and 126650CU2 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 126650CU2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and CVS HEALTH P, you can compare the effects of market volatilities on Citigroup and 126650CU2 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 126650CU2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 126650CU2.

Diversification Opportunities for Citigroup and 126650CU2

-0.1

Correlation Coefficient

Citigroup  126650CU2

Good diversification

The 3 months correlation between Citigroup and 126650CU2 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CVS HEALTH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH P 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 126650CU2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH P has no effect on the direction of Citigroup i.e., Citigroup and 126650CU2 go up and down completely randomly.

Pair Corralation between Citigroup and 126650CU2

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.23 times more return on investment than 126650CU2. However, Citigroup is 2.23 times more volatile than CVS HEALTH P. It trades about 0.62 of its potential returns per unit of risk. CVS HEALTH P is currently generating about -0.15 per unit of risk. If you would invest  6,161  in Citigroup on February 15, 2025 and sell it today you would earn a total of  1,435  from holding Citigroup or generate 23.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  CVS HEALTH P

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.

CVS HEALTH P

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVS HEALTH P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 126650CU2 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 126650CU2

The main advantage of trading using opposite Citigroup and 126650CU2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 126650CU2 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 126650CU2 will offset losses from the drop in 126650CU2's long position.

The idea behind Citigroup and CVS HEALTH P 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.