Correlation Between Health Care and CitiGroup

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Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and CitiGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Select and CitiGroup, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of CitiGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and CitiGroup.

Diversification Opportunities for Health Care and CitiGroup

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Health and CitiGroup is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Select and CitiGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CitiGroup and Health Care 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 Health Care Select 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 Health Care i.e., Health Care and CitiGroup go up and down completely randomly.

Pair Corralation between Health Care and CitiGroup

If you would invest  12,881  in Health Care Select on December 30, 2023 and sell it today you would earn a total of  1,892  from holding Health Care Select or generate 14.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Health Care Select  vs.  CitiGroup

 Performance 
       Timeline  
Health Care Select 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Health Care Select are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Health Care may actually be approaching a critical reversion point that can send shares even higher in April 2024.
CitiGroup 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 comparatively stable basic indicators, CitiGroup is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Health Care and CitiGroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Health Care and CitiGroup

The main advantage of trading using opposite Health Care and CitiGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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 Health Care Select 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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