Correlation Between Citigroup and SilverSPAC Unit

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

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

Diversification Opportunities for Citigroup and SilverSPAC Unit

0.88

Correlation Coefficient

Citigroup  SilverSPAC Unit

Very poor diversification

The 3 months correlation between Citigroup and SilverSPAC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SilverSPAC Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverSPAC Unit 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 SilverSPAC Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverSPAC Unit has no effect on the direction of Citigroup i.e., Citigroup and SilverSPAC Unit go up and down completely randomly.

Pair Corralation between Citigroup and SilverSPAC Unit

If you would invest  1,051  in SilverSPAC Unit on January 18, 2024 and sell it today you would earn a total of  0.00  from holding SilverSPAC Unit or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.55%
Values	Daily Returns

Citigroup  vs.  SilverSPAC Unit

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

SilverSPAC Unit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverSPAC Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SilverSPAC Unit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and SilverSPAC Unit

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

The idea behind Citigroup and SilverSPAC Unit 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.