Correlation Between Citigroup and Emetals
Can any of the company-specific risk be diversified away by investing in both Citigroup and Emetals 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 Emetals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Emetals, you can compare the effects of market volatilities on Citigroup and Emetals 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 Emetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Emetals.
Diversification Opportunities for Citigroup and Emetals
Very good diversification
The 3 months correlation between Citigroup and Emetals is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Emetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emetals 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 Emetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emetals has no effect on the direction of Citigroup i.e., Citigroup and Emetals go up and down completely randomly.
Pair Corralation between Citigroup and Emetals
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.3 times more return on investment than Emetals. However, Citigroup is 3.37 times less risky than Emetals. It trades about 0.08 of its potential returns per unit of risk. Emetals is currently generating about 0.0 per unit of risk. If you would invest 5,641 in Citigroup on December 10, 2024 and sell it today you would earn a total of 1,100 from holding Citigroup or generate 19.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Citigroup vs. Emetals
Performance |
| Timeline |
| Citigroup |
| Emetals |
Citigroup and Emetals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Emetals
The main advantage of trading using opposite Citigroup and Emetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Emetals 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 Emetals will offset losses from the drop in Emetals' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Emetals vs. Northern Star Resources | Emetals vs. Alcoa Inc | Emetals vs. Evolution Mining | Emetals vs. Bluescope Steel |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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