Correlation Between Citigroup and Emaar Misr

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

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

Diversification Opportunities for Citigroup and Emaar Misr

0.31

Correlation Coefficient

Citigroup  Emaar Misr

Weak diversification

The 3 months correlation between Citigroup and Emaar is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Emaar Misr for in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emaar Misr for 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 Emaar Misr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emaar Misr for has no effect on the direction of Citigroup i.e., Citigroup and Emaar Misr go up and down completely randomly.

Pair Corralation between Citigroup and Emaar Misr

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.56 times more return on investment than Emaar Misr. However, Citigroup is 1.79 times less risky than Emaar Misr. It trades about 0.02 of its potential returns per unit of risk. Emaar Misr for is currently generating about -0.08 per unit of risk. If you would invest  7,075  in Citigroup on September 25, 2024 and sell it today you would earn a total of  25.00  from holding Citigroup or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Citigroup  vs.  Emaar Misr for

Citigroup

Risk-Adjusted Performance

12 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Emaar Misr for

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emaar Misr for has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Citigroup and Emaar Misr

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

The idea behind Citigroup and Emaar Misr for 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.