Correlation Between Citigroup and Rightmove Plc

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

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

Diversification Opportunities for Citigroup and Rightmove Plc

-0.62

Correlation Coefficient

Citigroup  Rightmove Plc

Excellent diversification

The 3 months correlation between Citigroup and Rightmove is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rightmove plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rightmove plc 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 Rightmove Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rightmove plc has no effect on the direction of Citigroup i.e., Citigroup and Rightmove Plc go up and down completely randomly.

Pair Corralation between Citigroup and Rightmove Plc

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.59 times more return on investment than Rightmove Plc. However, Citigroup is 1.7 times less risky than Rightmove Plc. It trades about 0.07 of its potential returns per unit of risk. Rightmove plc is currently generating about 0.02 per unit of risk. If you would invest  4,168  in Citigroup on September 20, 2024 and sell it today you would earn a total of  2,734  from holding Citigroup or generate 65.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	68.55%
Values	Daily Returns

Citigroup  vs.  Rightmove plc

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Rightmove plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rightmove plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citigroup and Rightmove Plc

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

The idea behind Citigroup and Rightmove plc 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.