Correlation Between Citigroup and ECN Capital
Can any of the company-specific risk be diversified away by investing in both Citigroup and ECN Capital 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 ECN Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and ECN Capital Corp, you can compare the effects of market volatilities on Citigroup and ECN Capital 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 ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ECN Capital.
Diversification Opportunities for Citigroup and ECN Capital
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and ECN is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp 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 ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Citigroup i.e., Citigroup and ECN Capital go up and down completely randomly.
Pair Corralation between Citigroup and ECN Capital
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.41 times more return on investment than ECN Capital. However, Citigroup is 2.45 times less risky than ECN Capital. It trades about 0.12 of its potential returns per unit of risk. ECN Capital Corp is currently generating about 0.05 per unit of risk. If you would invest 4,364 in Citigroup on September 14, 2024 and sell it today you would earn a total of 2,737 from holding Citigroup or generate 62.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 88.48% |
| Values | Daily Returns |
Citigroup vs. ECN Capital Corp
Performance |
| Timeline |
| Citigroup |
| ECN Capital Corp |
Citigroup and ECN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and ECN Capital
The main advantage of trading using opposite Citigroup and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ECN Capital 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 ECN Capital will offset losses from the drop in ECN Capital's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| ECN Capital vs. PennyMac Finl Svcs | ECN Capital vs. Velocity Financial Llc | ECN Capital vs. Encore Capital Group | ECN Capital vs. Greystone Housing Impact |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |