Correlation Between Citigroup and Castor Maritime

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

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

Diversification Opportunities for Citigroup and Castor Maritime

-0.83

Correlation Coefficient

Citigroup  Castor Maritime

Pay attention - limited upside

The 3 months correlation between Citigroup and Castor is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Castor Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castor Maritime 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 Castor Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castor Maritime has no effect on the direction of Citigroup i.e., Citigroup and Castor Maritime go up and down completely randomly.

Pair Corralation between Citigroup and Castor Maritime

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.64 times more return on investment than Castor Maritime. However, Citigroup is 1.55 times less risky than Castor Maritime. It trades about 0.05 of its potential returns per unit of risk. Castor Maritime is currently generating about -0.12 per unit of risk. If you would invest  6,166  in Citigroup on January 26, 2024 and sell it today you would earn a total of  81.00  from holding Citigroup or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Castor Maritime

Citigroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Castor Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castor Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Citigroup and Castor Maritime

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

The idea behind Citigroup and Castor Maritime 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.