Correlation Between Citigroup and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Citigroup and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Emerson Radio, you can compare the effects of market volatilities on Citigroup and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Emerson Radio.
Diversification Opportunities for Citigroup and Emerson Radio
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Emerson is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Citigroup i.e., Citigroup and Emerson Radio go up and down completely randomly.
Pair Corralation between Citigroup and Emerson Radio
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.55 times more return on investment than Emerson Radio. However, Citigroup is 1.81 times less risky than Emerson Radio. It trades about 0.06 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest 4,353 in Citigroup on August 23, 2024 and sell it today you would earn a total of 2,475 from holding Citigroup or generate 56.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Emerson Radio
Performance |
| Timeline |
| Citigroup |
| Emerson Radio |
Citigroup and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Emerson Radio
The main advantage of trading using opposite Citigroup and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Turtle Beach Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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