Correlation Between Citigroup and Euroland Corporate
Can any of the company-specific risk be diversified away by investing in both Citigroup and Euroland Corporate 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 Euroland Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Euroland Corporate SA, you can compare the effects of market volatilities on Citigroup and Euroland Corporate 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 Euroland Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Euroland Corporate.
Diversification Opportunities for Citigroup and Euroland Corporate
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Euroland is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Euroland Corporate SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroland Corporate 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 Euroland Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroland Corporate has no effect on the direction of Citigroup i.e., Citigroup and Euroland Corporate go up and down completely randomly.
Pair Corralation between Citigroup and Euroland Corporate
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.28 times less return on investment than Euroland Corporate. But when comparing it to its historical volatility, Citigroup is 2.04 times less risky than Euroland Corporate. It trades about 0.09 of its potential returns per unit of risk. Euroland Corporate SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 226.00 in Euroland Corporate SA on November 28, 2024 and sell it today you would earn a total of 64.00 from holding Euroland Corporate SA or generate 28.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.32% |
| Values | Daily Returns |
Citigroup vs. Euroland Corporate SA
Performance |
| Timeline |
| Citigroup |
| Euroland Corporate |
Citigroup and Euroland Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Euroland Corporate
The main advantage of trading using opposite Citigroup and Euroland Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Euroland Corporate 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 Euroland Corporate will offset losses from the drop in Euroland Corporate's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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