Correlation Between Citigroup and Iren SpA
Can any of the company-specific risk be diversified away by investing in both Citigroup and Iren SpA 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 Iren SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Iren SpA ADR, you can compare the effects of market volatilities on Citigroup and Iren SpA 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 Iren SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Iren SpA.
Diversification Opportunities for Citigroup and Iren SpA
Modest diversification
The 3 months correlation between Citigroup and Iren is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Iren SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iren SpA ADR 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 Iren SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iren SpA ADR has no effect on the direction of Citigroup i.e., Citigroup and Iren SpA go up and down completely randomly.
Pair Corralation between Citigroup and Iren SpA
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.19 times more return on investment than Iren SpA. However, Citigroup is 2.19 times more volatile than Iren SpA ADR. It trades about 0.11 of its potential returns per unit of risk. Iren SpA ADR is currently generating about 0.08 per unit of risk. If you would invest 4,567 in Citigroup on August 29, 2024 and sell it today you would earn a total of 2,408 from holding Citigroup or generate 52.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.71% |
| Values | Daily Returns |
Citigroup vs. Iren SpA ADR
Performance |
| Timeline |
| Citigroup |
| Iren SpA ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Iren SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Iren SpA
The main advantage of trading using opposite Citigroup and Iren SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Iren SpA 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 Iren SpA will offset losses from the drop in Iren SpA's long position.The idea behind Citigroup and Iren SpA ADR 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.| Iren SpA vs. Integral Ad Science | Iren SpA vs. Alvotech | Iren SpA vs. Marchex | Iren SpA vs. Western Sierra Mining |
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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