Correlation Between Citigroup and Essex Property
Can any of the company-specific risk be diversified away by investing in both Citigroup and Essex Property 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 Essex Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Essex Property Trust, you can compare the effects of market volatilities on Citigroup and Essex Property 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 Essex Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Essex Property.
Diversification Opportunities for Citigroup and Essex Property
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Essex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Essex Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essex Property Trust 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 Essex Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essex Property Trust has no effect on the direction of Citigroup i.e., Citigroup and Essex Property go up and down completely randomly.
Pair Corralation between Citigroup and Essex Property
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.11 times more return on investment than Essex Property. However, Citigroup is 1.11 times more volatile than Essex Property Trust. It trades about 0.07 of its potential returns per unit of risk. Essex Property Trust is currently generating about 0.07 per unit of risk. If you would invest 4,117 in Citigroup on August 28, 2024 and sell it today you would earn a total of 2,958 from holding Citigroup or generate 71.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Essex Property Trust
Performance |
| Timeline |
| Citigroup |
| Essex Property Trust |
Citigroup and Essex Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Essex Property
The main advantage of trading using opposite Citigroup and Essex Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Essex Property 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 Essex Property will offset losses from the drop in Essex Property's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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