Correlation Between Citigroup and Love Hemp

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

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

Diversification Opportunities for Citigroup and Love Hemp

0.0

Correlation Coefficient

Citigroup  Love Hemp

Pay attention - limited upside

The 3 months correlation between Citigroup and Love is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Love Hemp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Love Hemp Group 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 Love Hemp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Love Hemp Group has no effect on the direction of Citigroup i.e., Citigroup and Love Hemp go up and down completely randomly.

Pair Corralation between Citigroup and Love Hemp

Taking into account the 90-day investment horizon Citigroup is expected to generate 13.02 times less return on investment than Love Hemp. But when comparing it to its historical volatility, Citigroup is 24.22 times less risky than Love Hemp. It trades about 0.1 of its potential returns per unit of risk. Love Hemp Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Love Hemp Group on January 26, 2024 and sell it today you would lose (0.04) from holding Love Hemp Group or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Love Hemp Group

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.

Love Hemp Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Love Hemp Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Love Hemp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Love Hemp

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

The idea behind Citigroup and Love Hemp Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.