Correlation Between Omnia Wellness and Citigroup

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

Diversification Opportunities for Omnia Wellness and Citigroup

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Omnia and Citigroup is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Omnia Wellness and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Omnia Wellness 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 Omnia Wellness 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 Omnia Wellness i.e., Omnia Wellness and Citigroup go up and down completely randomly.

Pair Corralation between Omnia Wellness and Citigroup

Given the investment horizon of 90 days Omnia Wellness is expected to generate 10.14 times more return on investment than Citigroup. However, Omnia Wellness is 10.14 times more volatile than Citigroup. It trades about 0.08 of its potential returns per unit of risk. Citigroup is currently generating about 0.28 per unit of risk. If you would invest  18.00  in Omnia Wellness on May 14, 2022 and sell it today you would lose (5.00)  from holding Omnia Wellness or give up 27.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Omnia Wellness  vs.  Citigroup

 Performance (%) 
       Timeline  
Omnia Wellness 
Omnia Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Wellness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Omnia Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Omnia Price Channel

Citigroup 
Citigroup Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Citigroup sustained solid returns over the last few months and may actually be approaching a breakup point.

Citigroup Price Channel

Omnia Wellness and Citigroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Omnia Wellness and Citigroup

The main advantage of trading using opposite Omnia Wellness and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnia Wellness 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.

Omnia Wellness

Pair trading matchups for Omnia Wellness

The idea behind Omnia Wellness 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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