Correlation Between Citigroup and E M
Can any of the company-specific risk be diversified away by investing in both Citigroup and E M 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 E M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and E M Computing, you can compare the effects of market volatilities on Citigroup and E M 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 E M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and E M.
Diversification Opportunities for Citigroup and E M
Good diversification
The 3 months correlation between Citigroup and EMCO is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and E M Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E M Computing 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 E M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E M Computing has no effect on the direction of Citigroup i.e., Citigroup and E M go up and down completely randomly.
Pair Corralation between Citigroup and E M
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.65 times more return on investment than E M. However, Citigroup is 1.53 times less risky than E M. It trades about 0.09 of its potential returns per unit of risk. E M Computing is currently generating about 0.01 per unit of risk. If you would invest 4,479 in Citigroup on September 12, 2024 and sell it today you would earn a total of 2,771 from holding Citigroup or generate 61.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.02% |
| Values | Daily Returns |
Citigroup vs. E M Computing
Performance |
| Timeline |
| Citigroup |
| E M Computing |
Citigroup and E M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and E M
The main advantage of trading using opposite Citigroup and E M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, E M 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 E M will offset losses from the drop in E M's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| E M vs. Teva Pharmaceutical Industries | E M vs. Elbit Systems | E M vs. Nice | E M vs. Bezeq Israeli Telecommunication |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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