Correlation Between ATT and Citigroup

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

Diversification Opportunities for ATT and Citigroup

  Correlation Coefficient

Poor diversification

The 3 months correlation between ATT and Citigroup is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and ATT 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 ATT Inc 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 ATT i.e., ATT and Citigroup go up and down completely randomly.

Pair Corralation between ATT and Citigroup

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.68 times more return on investment than Citigroup. However, ATT Inc is 1.47 times less risky than Citigroup. It trades about 0.03 of its potential returns per unit of risk. Citigroup is currently generating about -0.01 per unit of risk. If you would invest  1,820  in ATT Inc on December 25, 2022 and sell it today you would earn a total of  41.00  from holding ATT Inc or generate 2.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

ATT Inc  vs.  Citigroup

 Performance (%) 
ATT Inc 

ATT Performance

2 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

ATT and Citigroup Volatility Contrast

   Predicted Return Density   

Pair Trading with ATT and Citigroup

The main advantage of trading using opposite ATT and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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 ATT Inc 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.

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