Correlation Between Citigroup and Emmi AG
Can any of the company-specific risk be diversified away by investing in both Citigroup and Emmi AG 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 Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Emmi AG, you can compare the effects of market volatilities on Citigroup and Emmi AG 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 Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Emmi AG.
Diversification Opportunities for Citigroup and Emmi AG
Pay attention - limited upside
The 3 months correlation between Citigroup and Emmi is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG 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 Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of Citigroup i.e., Citigroup and Emmi AG go up and down completely randomly.
Pair Corralation between Citigroup and Emmi AG
If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Emmi AG
Performance |
| Timeline |
| Citigroup |
| Emmi AG |
Citigroup and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Emmi AG
The main advantage of trading using opposite Citigroup and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Emmi AG 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 Emmi AG will offset losses from the drop in Emmi AG's long position.The idea behind Citigroup and Emmi AG 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 the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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