Correlation Between Citigroup and Blackrock High

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

By analyzing existing cross correlation between Citigroup and Blackrock High Equity, you can compare the effects of market volatilities on Citigroup and Blackrock High 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 Blackrock High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Blackrock High.

Diversification Opportunities for Citigroup and Blackrock High

0.95

Correlation Coefficient

Citigroup  Blackrock High

Almost no diversification

The 3 months correlation between Citigroup and Blackrock is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Blackrock High Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock High Equity 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 Blackrock High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock High Equity has no effect on the direction of Citigroup i.e., Citigroup and Blackrock High go up and down completely randomly.

Pair Corralation between Citigroup and Blackrock High

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Blackrock High. In addition to that, Citigroup is 2.13 times more volatile than Blackrock High Equity. It trades about -0.1 of its total potential returns per unit of risk. Blackrock High Equity is currently generating about -0.16 per unit of volatility. If you would invest  1,482  in Blackrock High Equity on January 20, 2024 and sell it today you would lose (36.00) from holding Blackrock High Equity or give up 2.43% of portfolio value over 90 days.

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

Citigroup  vs.  Blackrock High Equity

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Blackrock High Equity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock High Equity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Blackrock High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Blackrock High

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

The idea behind Citigroup and Blackrock High Equity 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.