Correlation Between Citigroup and Embark Education
Can any of the company-specific risk be diversified away by investing in both Citigroup and Embark Education 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 Embark Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Embark Education Group, you can compare the effects of market volatilities on Citigroup and Embark Education 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 Embark Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Embark Education.
Diversification Opportunities for Citigroup and Embark Education
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Embark is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Embark Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Education 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 Embark Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Education has no effect on the direction of Citigroup i.e., Citigroup and Embark Education go up and down completely randomly.
Pair Corralation between Citigroup and Embark Education
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times less return on investment than Embark Education. In addition to that, Citigroup is 1.1 times more volatile than Embark Education Group. It trades about 0.07 of its total potential returns per unit of risk. Embark Education Group is currently generating about 0.11 per unit of volatility. If you would invest 64.00 in Embark Education Group on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Embark Education Group or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Citigroup vs. Embark Education Group
Performance |
| Timeline |
| Citigroup |
| Embark Education |
Citigroup and Embark Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Embark Education
The main advantage of trading using opposite Citigroup and Embark Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Embark Education 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 Embark Education will offset losses from the drop in Embark Education's long position.The idea behind Citigroup and Embark Education Group 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.| Embark Education vs. Macquarie Technology Group | Embark Education vs. Richmond Vanadium Technology | Embark Education vs. Cleanaway Waste Management | Embark Education vs. Microequities Asset Management |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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