Correlation Between Citigroup and Etron Technology
Can any of the company-specific risk be diversified away by investing in both Citigroup and Etron Technology 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 Etron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Etron Technology, you can compare the effects of market volatilities on Citigroup and Etron Technology 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 Etron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Etron Technology.
Diversification Opportunities for Citigroup and Etron Technology
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Etron is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Etron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etron Technology 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 Etron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etron Technology has no effect on the direction of Citigroup i.e., Citigroup and Etron Technology go up and down completely randomly.
Pair Corralation between Citigroup and Etron Technology
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.82 times more return on investment than Etron Technology. However, Citigroup is 1.22 times less risky than Etron Technology. It trades about 0.45 of its potential returns per unit of risk. Etron Technology is currently generating about -0.19 per unit of risk. If you would invest 6,842 in Citigroup on October 20, 2024 and sell it today you would earn a total of 1,157 from holding Citigroup or generate 16.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Citigroup vs. Etron Technology
Performance |
| Timeline |
| Citigroup |
| Etron Technology |
Citigroup and Etron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Etron Technology
The main advantage of trading using opposite Citigroup and Etron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Etron Technology 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 Etron Technology will offset losses from the drop in Etron Technology's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| Etron Technology vs. Sunplus Technology Co | Etron Technology vs. Realtek Semiconductor Corp | Etron Technology vs. Winbond Electronics Corp | Etron Technology vs. VIA Technologies |
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 the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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