Correlation Between Intel and Citigroup

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

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

Diversification Opportunities for Intel and Citigroup

0.16

Correlation Coefficient

Intel Citigroup

Average diversification

The 3 months correlation between Intel and Citigroup is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Intel 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 Intel are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Intel i.e., Intel and Citigroup go up and down completely randomly.

Pair Corralation between Intel and Citigroup

Given the investment horizon of 90 days Intel is expected to under-perform the Citigroup. In addition to that, Intel is 1.16 times more volatile than Citigroup. It trades about -0.06 of its total potential returns per unit of risk. Citigroup is currently generating about -0.04 per unit of volatility. If you would invest  6,778  in Citigroup on December 24, 2022 and sell it today you would lose (2,433)  from holding Citigroup or give up 35.9% of portfolio value over 90 days.

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

Intel  vs.  Citigroup

Intel

Intel Performance

7 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Citigroup

Citigroup Performance

0 of 100

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Intel and Citigroup

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

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The idea behind Intel and Citigroup 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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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.