Correlation Between Citigroup and Averbuch Formica

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

Diversification Opportunities for Citigroup and Averbuch Formica

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Citigroup and Averbuch is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Averbuch Formica Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Averbuch Formica Center 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 Averbuch Formica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Averbuch Formica Center has no effect on the direction of Citigroup i.e., Citigroup and Averbuch Formica go up and down completely randomly.

Pair Corralation between Citigroup and Averbuch Formica

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.33 times more return on investment than Averbuch Formica. However, Citigroup is 3.03 times less risky than Averbuch Formica. It trades about 0.11 of its potential returns per unit of risk. Averbuch Formica Center is currently generating about -0.11 per unit of risk. If you would invest  4,407  in Citigroup on December 30, 2023 and sell it today you would earn a total of  1,917  from holding Citigroup or generate 43.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy79.03%
ValuesDaily Returns

Citigroup  vs.  Averbuch Formica Center

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
Averbuch Formica Center 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Averbuch Formica Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Citigroup and Averbuch Formica Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Averbuch Formica

The main advantage of trading using opposite Citigroup and Averbuch Formica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Averbuch Formica 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 Averbuch Formica will offset losses from the drop in Averbuch Formica's long position.
The idea behind Citigroup and Averbuch Formica Center 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.
Check out your portfolio center.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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