Correlation Between Citigroup and Emilia Devel
Can any of the company-specific risk be diversified away by investing in both Citigroup and Emilia Devel 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 Emilia Devel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Emilia Devel, you can compare the effects of market volatilities on Citigroup and Emilia Devel 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 Emilia Devel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Emilia Devel.
Diversification Opportunities for Citigroup and Emilia Devel
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Emilia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Emilia Devel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emilia Devel 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 Emilia Devel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emilia Devel has no effect on the direction of Citigroup i.e., Citigroup and Emilia Devel go up and down completely randomly.
Pair Corralation between Citigroup and Emilia Devel
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.77 times less return on investment than Emilia Devel. But when comparing it to its historical volatility, Citigroup is 1.35 times less risky than Emilia Devel. It trades about 0.04 of its potential returns per unit of risk. Emilia Devel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 164,319 in Emilia Devel on January 26, 2024 and sell it today you would earn a total of 73,381 from holding Emilia Devel or generate 44.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.15% |
| Values | Daily Returns |
Citigroup vs. Emilia Devel
Performance |
| Timeline |
| Citigroup |
| Emilia Devel |
Citigroup and Emilia Devel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Emilia Devel
The main advantage of trading using opposite Citigroup and Emilia Devel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Emilia Devel 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 Emilia Devel will offset losses from the drop in Emilia Devel's long position.| Citigroup vs. Aquagold International | Citigroup vs. Thrivent High Yield | Citigroup vs. Morningstar Unconstrained Allocation | Citigroup vs. Via Renewables |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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