It’s Profitable To Be Patient With Citigroup Stock

Citigroup Stock (NYSE: C) has seen some downward movement since the start of September, after a larger sell-off in the stock market drove the stock price down – the stock has moved 2.2% in a week (5 trading days) to $43 now. But will the company’s stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent?

According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using 20 years of historical stock data, the stock is unlikely to give any meaningful return in the next one-month (21 trading days) period after experiencing a 2.2% rise in a week (5 trading days). Notably, though, the stock is very likely to underperform the S&P500 over the next month (21 trading days), with an expected excess return of around -0.5% compared to the S&P500.

But how would these numbers change if you are interested in holding Citigroup stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test the Average and Excess Return after a Fall or Rise in Citigroup stock. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF Citigroup stock moved by -5% over 5 trading days, THEN over the next 21 trading days, C stock moves an average of 1.6 percent, which implies an excess return of 0.4 percent compared to the S&P500.

More importantly, there is 54.5% probability of a positive return over the next 21 trading days and 48.3% probability of a positive excess return after a -5% change over 5 trading days.

Some Fun Scenarios, FAQs & Making Sense of Citigroup Stock Movements:

Question 1: Is the average return for Citigroup stock higher after a drop?

Answer:

Consider two situations,

Case 1: Citigroup stock drops by -5% or more in a week

Case 2: Citigroup stock rises by 5% or more in a week

Is the average return for Citigroup Inc stock higher over the subsequent month after Case 1 or Case 2?

C stock fares better after Case 2, with an average return of 1.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.9% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Citigroup Inc stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Citigroup Inc stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For C stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although C stock appears to be an exception to this general observation.

C’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Citigroup Inc stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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