Correlation Between Citigroup Capital and Clearbridge Select

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

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

Diversification Opportunities for Citigroup Capital and Clearbridge Select

-0.28

Correlation Coefficient

Citigroup Capital  Clearbridge Select

Very good diversification

The 3 months correlation between Citigroup and Clearbridge is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup Capital XIII and Clearbridge Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Select and Citigroup Capital 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 Capital XIII are associated (or correlated) with Clearbridge Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Select has no effect on the direction of Citigroup Capital i.e., Citigroup Capital and Clearbridge Select go up and down completely randomly.

Pair Corralation between Citigroup Capital and Clearbridge Select

Given the investment horizon of 90 days Citigroup Capital XIII is expected to generate 0.71 times more return on investment than Clearbridge Select. However, Citigroup Capital XIII is 1.42 times less risky than Clearbridge Select. It trades about 0.07 of its potential returns per unit of risk. Clearbridge Select Fund is currently generating about -0.23 per unit of risk. If you would invest  2,881  in Citigroup Capital XIII on February 2, 2024 and sell it today you would earn a total of  34.00  from holding Citigroup Capital XIII or generate 1.18% return on investment over 90 days.

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

Citigroup Capital XIII  vs.  Clearbridge Select Fund

Citigroup Capital XIII

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup Capital XIII are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citigroup Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Clearbridge Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearbridge Select Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Clearbridge Select 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 Capital and Clearbridge Select

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

The idea behind Citigroup Capital XIII and Clearbridge Select Fund 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.