Correlation Between Citigroup and Exela Technologies

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

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

Diversification Opportunities for Citigroup and Exela Technologies

0.87

Correlation Coefficient

Citigroup  Exela Technologies

Very poor diversification

The 3 months correlation between Citigroup and Exela is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Exela Technologies Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exela Technologies 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 Exela Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exela Technologies has no effect on the direction of Citigroup i.e., Citigroup and Exela Technologies go up and down completely randomly.

Pair Corralation between Citigroup and Exela Technologies

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.57 times less return on investment than Exela Technologies. But when comparing it to its historical volatility, Citigroup is 4.08 times less risky than Exela Technologies. It trades about 0.19 of its potential returns per unit of risk. Exela Technologies Preferred is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  143.00  in Exela Technologies Preferred on February 8, 2024 and sell it today you would earn a total of  54.00  from holding Exela Technologies Preferred or generate 37.76% return on investment over 90 days.

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

Citigroup  vs.  Exela Technologies Preferred

Citigroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Exela Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exela Technologies Preferred are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Exela Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Exela Technologies

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

The idea behind Citigroup and Exela Technologies Preferred 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.