Correlation Between CitiGroup and UGAZ

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

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

Diversification Opportunities for CitiGroup and UGAZ

0.0

Correlation Coefficient

CitiGroup  UGAZ

Pay attention - limited upside

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

Pair Corralation between CitiGroup and UGAZ

If you would invest (100.00) in UGAZ on January 30, 2024 and sell it today you would earn a total of  100.00  from holding UGAZ or generate -100.0% return on investment over 90 days.

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

CitiGroup  vs.  UGAZ

CitiGroup

Risk-Adjusted Performance

0 of 100

Very Weak

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

UGAZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UGAZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, UGAZ is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CitiGroup and UGAZ

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

The idea behind CitiGroup and UGAZ 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.