Correlation Between Citigroup and Emerald Insights
Can any of the company-specific risk be diversified away by investing in both Citigroup and Emerald Insights 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 Emerald Insights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Emerald Insights Fund, you can compare the effects of market volatilities on Citigroup and Emerald Insights 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 Emerald Insights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Emerald Insights.
Diversification Opportunities for Citigroup and Emerald Insights
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Emerald is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Emerald Insights Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Insights 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 Emerald Insights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Insights has no effect on the direction of Citigroup i.e., Citigroup and Emerald Insights go up and down completely randomly.
Pair Corralation between Citigroup and Emerald Insights
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.93 times more return on investment than Emerald Insights. However, Citigroup is 1.93 times more volatile than Emerald Insights Fund. It trades about 0.21 of its potential returns per unit of risk. Emerald Insights Fund is currently generating about 0.16 per unit of risk. If you would invest 5,683 in Citigroup on September 12, 2024 and sell it today you would earn a total of 1,567 from holding Citigroup or generate 27.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Emerald Insights Fund
Performance |
Timeline |
Citigroup |
Emerald Insights |
Citigroup and Emerald Insights Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Emerald Insights
The main advantage of trading using opposite Citigroup and Emerald Insights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Emerald Insights 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 Emerald Insights will offset losses from the drop in Emerald Insights' long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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