Correlation Between UPS CDR and CITIGROUP CDR

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

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

Diversification Opportunities for UPS CDR and CITIGROUP CDR

0.78

Correlation Coefficient

UPS CDR  CITIGROUP CDR

Poor diversification

The 3 months correlation between UPS and CITIGROUP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and CITIGROUP CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP CDR and UPS CDR 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 UPS CDR are associated (or correlated) with CITIGROUP CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP CDR has no effect on the direction of UPS CDR i.e., UPS CDR and CITIGROUP CDR go up and down completely randomly.

Pair Corralation between UPS CDR and CITIGROUP CDR

Assuming the 90 days trading horizon UPS CDR is expected to generate 2.79 times less return on investment than CITIGROUP CDR. In addition to that, UPS CDR is 1.2 times more volatile than CITIGROUP CDR. It trades about 0.09 of its total potential returns per unit of risk. CITIGROUP CDR is currently generating about 0.29 per unit of volatility. If you would invest  3,287  in CITIGROUP CDR on April 10, 2025 and sell it today you would earn a total of  308.00  from holding CITIGROUP CDR or generate 9.37% return on investment over 90 days.

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

UPS CDR  vs.  CITIGROUP CDR

UPS CDR

Risk-Adjusted Performance

Modest

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

CITIGROUP CDR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, CITIGROUP CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UPS CDR and CITIGROUP CDR

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

The idea behind UPS CDR and CITIGROUP CDR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.