Correlation Between Citigroup and Pfizer

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

Diversification Opportunities for Citigroup and Pfizer

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Citigroup and Pfizer is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Citigroup i.e., Citigroup and Pfizer go up and down completely randomly.

Pair Corralation between Citigroup and Pfizer

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Pfizer. In addition to that, Citigroup is 1.07 times more volatile than Pfizer Inc. It trades about -0.21 of its total potential returns per unit of risk. Pfizer Inc is currently generating about -0.07 per unit of volatility. If you would invest  5,304  in Pfizer Inc on March 30, 2022 and sell it today you would lose (169.00)  from holding Pfizer Inc or give up 3.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Pfizer Inc

 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 latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Citigroup Price Channel

Pfizer Inc 
Pfizer Performance
0 of 100
Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pfizer Price Channel

Citigroup and Pfizer Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Citigroup and Pfizer

The main advantage of trading using opposite Citigroup and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.
The idea behind Citigroup and Pfizer Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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