Correlation Between Citigroup and Cruz Cobalt

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

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

Diversification Opportunities for Citigroup and Cruz Cobalt

-0.35

Correlation Coefficient

Citigroup  Cruz Cobalt

Very good diversification

The 3 months correlation between Citigroup and Cruz is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cruz Cobalt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cruz Cobalt Corp 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 Cruz Cobalt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cruz Cobalt Corp has no effect on the direction of Citigroup i.e., Citigroup and Cruz Cobalt go up and down completely randomly.

Pair Corralation between Citigroup and Cruz Cobalt

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.09 times more return on investment than Cruz Cobalt. However, Citigroup is 11.36 times less risky than Cruz Cobalt. It trades about 0.23 of its potential returns per unit of risk. Cruz Cobalt Corp is currently generating about -0.08 per unit of risk. If you would invest  6,903  in Citigroup on September 7, 2024 and sell it today you would earn a total of  320.00  from holding Citigroup or generate 4.64% return on investment over 90 days.

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

Citigroup  vs.  Cruz Cobalt Corp

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cruz Cobalt Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cruz Cobalt Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cruz Cobalt is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Cruz Cobalt

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

The idea behind Citigroup and Cruz Cobalt Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.