Correlation Between Citigroup and Gaming Leisure

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

Diversification Opportunities for Citigroup and Gaming Leisure

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Citigroup and Gaming is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Gaming Leisure Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Leisure Properties 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 Gaming Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Leisure Properties has no effect on the direction of Citigroup i.e., Citigroup and Gaming Leisure go up and down completely randomly.

Pair Corralation between Citigroup and Gaming Leisure

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.02 times more return on investment than Gaming Leisure. However, Citigroup is 1.02 times more volatile than Gaming Leisure Properties. It trades about 0.56 of its potential returns per unit of risk. Gaming Leisure Properties is currently generating about 0.21 per unit of risk. If you would invest  5,571  in Citigroup on December 29, 2023 and sell it today you would earn a total of  704.00  from holding Citigroup or generate 12.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Gaming Leisure Properties

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
Gaming Leisure Properties 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Gaming Leisure Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Gaming Leisure is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Citigroup and Gaming Leisure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Gaming Leisure

The main advantage of trading using opposite Citigroup and Gaming Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Gaming Leisure 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 Gaming Leisure will offset losses from the drop in Gaming Leisure's long position.
The idea behind Citigroup and Gaming Leisure Properties 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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