Correlation Between Citigroup and 1290 Essex

Can any of the company-specific risk be diversified away by investing in both Citigroup and 1290 Essex 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 1290 Essex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and 1290 Essex Small, you can compare the effects of market volatilities on Citigroup and 1290 Essex 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 1290 Essex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 1290 Essex.

Diversification Opportunities for Citigroup and 1290 Essex

0.92

Correlation Coefficient

Citigroup  1290 Essex

Almost no diversification

The 3 months correlation between Citigroup and 1290 is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 1290 Essex Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Essex Small 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 1290 Essex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Essex Small has no effect on the direction of Citigroup i.e., Citigroup and 1290 Essex go up and down completely randomly.

Pair Corralation between Citigroup and 1290 Essex

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times more return on investment than 1290 Essex. However, Citigroup is 1.17 times more volatile than 1290 Essex Small. It trades about 0.08 of its potential returns per unit of risk. 1290 Essex Small is currently generating about 0.05 per unit of risk. If you would invest  4,091  in Citigroup on September 15, 2024 and sell it today you would earn a total of  3,010  from holding Citigroup or generate 73.58% 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.  1290 Essex Small

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.

1290 Essex Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 1290 Essex Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, 1290 Essex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and 1290 Essex

The main advantage of trading using opposite Citigroup and 1290 Essex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 1290 Essex 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 1290 Essex will offset losses from the drop in 1290 Essex's long position.

The idea behind Citigroup and 1290 Essex Small 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.