Correlation Between Citigroup and FirstCash

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

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

Diversification Opportunities for Citigroup and FirstCash

0.56

Correlation Coefficient

Citigroup  FirstCash

Very weak diversification

The 3 months correlation between Citigroup and FirstCash is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash 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 FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of Citigroup i.e., Citigroup and FirstCash go up and down completely randomly.

Pair Corralation between Citigroup and FirstCash

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.53 times more return on investment than FirstCash. However, Citigroup is 1.9 times less risky than FirstCash. It trades about -0.08 of its potential returns per unit of risk. FirstCash is currently generating about -0.11 per unit of risk. If you would invest  6,346  in Citigroup on February 1, 2024 and sell it today you would lose (211.00) from holding Citigroup or give up 3.32% of portfolio value over 90 days.

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

Citigroup  vs.  FirstCash

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

FirstCash

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Citigroup and FirstCash

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

The idea behind Citigroup and FirstCash 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.