Correlation Between Lloyds Banking and Citigroup

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

By analyzing existing cross correlation between Lloyds Banking Group and Citigroup, you can compare the effects of market volatilities on Lloyds Banking and Citigroup 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 Lloyds Banking with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and Citigroup.

Diversification Opportunities for Lloyds Banking and Citigroup

0.36

Correlation Coefficient

Lloyds Banking  Citigroup

Weak diversification

The 3 months correlation between Lloyds and Citigroup is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Lloyds Banking 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 Lloyds Banking Group are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and Citigroup go up and down completely randomly.

Pair Corralation between Lloyds Banking and Citigroup

Assuming the 90 days trading horizon Lloyds Banking is expected to generate 5.18 times less return on investment than Citigroup. In addition to that, Lloyds Banking is 1.0 times more volatile than Citigroup. It trades about 0.07 of its total potential returns per unit of risk. Citigroup is currently generating about 0.37 per unit of volatility. If you would invest  6,113  in Citigroup on April 22, 2025 and sell it today you would earn a total of  2,551  from holding Citigroup or generate 41.73% return on investment over 90 days.

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

Lloyds Banking Group  vs.  Citigroup

Lloyds Banking Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lloyds Banking Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lloyds Banking may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citigroup sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lloyds Banking and Citigroup

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

The idea behind Lloyds Banking Group and Citigroup 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.