Correlation Between Citigroup and Essentra Plc
Can any of the company-specific risk be diversified away by investing in both Citigroup and Essentra Plc 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 Essentra Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Essentra Plc, you can compare the effects of market volatilities on Citigroup and Essentra Plc 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 Essentra Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Essentra Plc.
Diversification Opportunities for Citigroup and Essentra Plc
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Essentra is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Essentra Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essentra Plc 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 Essentra Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essentra Plc has no effect on the direction of Citigroup i.e., Citigroup and Essentra Plc go up and down completely randomly.
Pair Corralation between Citigroup and Essentra Plc
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.72 times more return on investment than Essentra Plc. However, Citigroup is 1.4 times less risky than Essentra Plc. It trades about 0.11 of its potential returns per unit of risk. Essentra Plc is currently generating about 0.04 per unit of risk. If you would invest 4,676 in Citigroup on September 2, 2024 and sell it today you would earn a total of 2,411 from holding Citigroup or generate 51.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Citigroup vs. Essentra Plc
Performance |
| Timeline |
| Citigroup |
| Essentra Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Essentra Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Essentra Plc
The main advantage of trading using opposite Citigroup and Essentra Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Essentra Plc 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 Essentra Plc will offset losses from the drop in Essentra Plc's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Essentra Plc vs. LyondellBasell Industries NV | Essentra Plc vs. International Flavors Fragrances | Essentra Plc vs. Cabot | Essentra Plc vs. Westlake Chemical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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