Correlation Between Citigroup and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both Citigroup and Siemens Energy 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 Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Siemens Energy AG, you can compare the effects of market volatilities on Citigroup and Siemens Energy 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 Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Siemens Energy.
Diversification Opportunities for Citigroup and Siemens Energy
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Siemens is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy 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 Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of Citigroup i.e., Citigroup and Siemens Energy go up and down completely randomly.
Pair Corralation between Citigroup and Siemens Energy
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.79 times less return on investment than Siemens Energy. But when comparing it to its historical volatility, Citigroup is 1.67 times less risky than Siemens Energy. It trades about 0.13 of its potential returns per unit of risk. Siemens Energy AG is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,367 in Siemens Energy AG on September 25, 2024 and sell it today you would earn a total of 1,745 from holding Siemens Energy AG or generate 51.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.92% |
| Values | Daily Returns |
Citigroup vs. Siemens Energy AG
Performance |
| Timeline |
| Citigroup |
| Siemens Energy AG |
Citigroup and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Siemens Energy
The main advantage of trading using opposite Citigroup and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Siemens Energy 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 Siemens Energy will offset losses from the drop in Siemens Energy's long position.The idea behind Citigroup and Siemens Energy 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.| Siemens Energy vs. SIEMENS AG SP | Siemens Energy vs. Siemens Aktiengesellschaft | Siemens Energy vs. Siemens Aktiengesellschaft | Siemens Energy vs. Schneider Electric SE |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |