Correlation Between Alphabet and Citigroup

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

Diversification Opportunities for Alphabet and Citigroup

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alphabet and Citigroup is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Cl A and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Alphabet 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 Alphabet Cl A are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Alphabet i.e., Alphabet and Citigroup go up and down completely randomly.

Pair Corralation between Alphabet and Citigroup

Assuming the 90 days horizon Alphabet Cl A is expected to generate 1.23 times more return on investment than Citigroup. However, Alphabet is 1.23 times more volatile than Citigroup. It trades about -0.27 of its potential returns per unit of risk. Citigroup is currently generating about -0.34 per unit of risk. If you would invest  10,894  in Alphabet Cl A on July 1, 2022 and sell it today you would lose (1,225)  from holding Alphabet Cl A or give up 11.24% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alphabet Cl A  vs.  Citigroup

 Performance (%) 
       Timeline  
Alphabet Cl A 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Alphabet Price Channel

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 somewhat strong fundamental indicators, Citigroup is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Citigroup Price Channel

Alphabet and Citigroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alphabet and Citigroup

The main advantage of trading using opposite Alphabet and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.
Alphabet vs. Tencent Holdings
The idea behind Alphabet Cl A and Citigroup 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.
Citigroup vs. Amazon Inc
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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