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

0.82

Correlation Coefficient

Citigroup  Emilia Devel

Very poor diversification

The 3 months correlation between Citigroup and Emilia is 0.82. 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 3.93 times less return on investment than Emilia Devel. But when comparing it to its historical volatility, Citigroup is 2.91 times less risky than Emilia Devel. It trades about 0.2 of its potential returns per unit of risk. Emilia Devel is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  239,200  in Emilia Devel on September 16, 2024 and sell it today you would earn a total of  25,200  from holding Emilia Devel or generate 10.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	80.95%
Values	Daily Returns

Citigroup  vs.  Emilia Devel

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.

Emilia Devel

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emilia Devel are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Emilia Devel sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Citigroup and Emilia Devel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.