Correlation Between Handelsinvest Nordamerika and Citigroup

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

Diversification Opportunities for Handelsinvest Nordamerika and Citigroup

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Handelsinvest and Citigroup is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Handelsinvest Nordamerika and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Handelsinvest Nordamerika 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 Handelsinvest Nordamerika 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 Handelsinvest Nordamerika i.e., Handelsinvest Nordamerika and Citigroup go up and down completely randomly.

Pair Corralation between Handelsinvest Nordamerika and Citigroup

Assuming the 90 days trading horizon Handelsinvest Nordamerika is expected to under-perform the Citigroup. But the stock apears to be less risky and, when comparing its historical volatility, Handelsinvest Nordamerika is 1.39 times less risky than Citigroup. The stock trades about 0.0 of its potential returns per unit of risk. The Citigroup is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,637  in Citigroup on December 30, 2023 and sell it today you would earn a total of  1,687  from holding Citigroup or generate 36.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Handelsinvest Nordamerika  vs.  Citigroup

 Performance 
       Timeline  
Handelsinvest Nordamerika 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Handelsinvest Nordamerika has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Handelsinvest Nordamerika is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
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.

Handelsinvest Nordamerika and Citigroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Handelsinvest Nordamerika and Citigroup

The main advantage of trading using opposite Handelsinvest Nordamerika and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Handelsinvest Nordamerika 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 Handelsinvest Nordamerika 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.

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