Correlation Between Citigroup and Carvana Co

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Carvana Co 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 Carvana Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Carvana Co Cl, you can compare the effects of market volatilities on Citigroup and Carvana Co 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 Carvana Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Carvana Co.

Diversification Opportunities for Citigroup and Carvana Co

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Citigroup and Carvana is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Carvana Co Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana Co Cl 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 Carvana Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carvana Co Cl has no effect on the direction of Citigroup i.e., Citigroup and Carvana Co go up and down completely randomly.

Pair Corralation between Citigroup and Carvana Co

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.27 times more return on investment than Carvana Co. However, Citigroup is 3.7 times less risky than Carvana Co. It trades about -0.07 of its potential returns per unit of risk. Carvana Co Cl is currently generating about -0.36 per unit of risk. If you would invest  5,209  in Citigroup on February 20, 2022 and sell it today you would lose (234.00)  from holding Citigroup or give up 4.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Carvana Co Cl

 Performance (%) 
      Timeline 
Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Citigroup Price Channel

Carvana Co Cl 
Carvana Performance
0 of 100
Over the last 90 days Carvana Co Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Carvana Price Channel

Citigroup and Carvana Co Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Citigroup and Carvana Co

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

Citigroup

Pair trading matchups for Citigroup

The idea behind Citigroup and Carvana Co Cl 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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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