Correlation Between Citigroup and Driehaus Emerging

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

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

Diversification Opportunities for Citigroup and Driehaus Emerging

-0.52

Correlation Coefficient

Citigroup  Driehaus Emerging

Excellent diversification

The 3 months correlation between Citigroup and Driehaus is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Driehaus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driehaus Emerging Markets 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 Driehaus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driehaus Emerging Markets has no effect on the direction of Citigroup i.e., Citigroup and Driehaus Emerging go up and down completely randomly.

Pair Corralation between Citigroup and Driehaus Emerging

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.29 times more return on investment than Driehaus Emerging. However, Citigroup is 2.29 times more volatile than Driehaus Emerging Markets. It trades about 0.18 of its potential returns per unit of risk. Driehaus Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest  5,788  in Citigroup on September 14, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

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

Citigroup  vs.  Driehaus Emerging Markets

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Driehaus Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Driehaus Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Driehaus Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Driehaus Emerging

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

The idea behind Citigroup and Driehaus Emerging Markets 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.