Correlation Between Citigroup and Eastside Distilling

Can any of the company-specific risk be diversified away by investing in both Citigroup and Eastside Distilling 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 Eastside Distilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Eastside Distilling, you can compare the effects of market volatilities on Citigroup and Eastside Distilling 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 Eastside Distilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Eastside Distilling.

Diversification Opportunities for Citigroup and Eastside Distilling

-0.33

Correlation Coefficient

Citigroup  Eastside Distilling

Very good diversification

The 3 months correlation between Citigroup and Eastside is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Eastside Distilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastside Distilling 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 Eastside Distilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastside Distilling has no effect on the direction of Citigroup i.e., Citigroup and Eastside Distilling go up and down completely randomly.

Pair Corralation between Citigroup and Eastside Distilling

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.23 times more return on investment than Eastside Distilling. However, Citigroup is 4.27 times less risky than Eastside Distilling. It trades about 0.04 of its potential returns per unit of risk. Eastside Distilling is currently generating about -0.04 per unit of risk. If you would invest  4,624  in Citigroup on January 27, 2024 and sell it today you would earn a total of  1,555  from holding Citigroup or generate 33.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Eastside Distilling

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eastside Distilling

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastside Distilling are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eastside Distilling may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Citigroup and Eastside Distilling

The main advantage of trading using opposite Citigroup and Eastside Distilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Eastside Distilling 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 Eastside Distilling will offset losses from the drop in Eastside Distilling's long position.

The idea behind Citigroup and Eastside Distilling 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.