Correlation Between Citigroup and Eventide Limited

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

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

Diversification Opportunities for Citigroup and Eventide Limited

-0.44

Correlation Coefficient

Citigroup  Eventide Limited

Very good diversification

The 3 months correlation between Citigroup and Eventide is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Eventide Limited Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Limited Term 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 Eventide Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Limited Term has no effect on the direction of Citigroup i.e., Citigroup and Eventide Limited go up and down completely randomly.

Pair Corralation between Citigroup and Eventide Limited

Taking into account the 90-day investment horizon Citigroup is expected to generate 11.19 times more return on investment than Eventide Limited. However, Citigroup is 11.19 times more volatile than Eventide Limited Term Bond. It trades about 0.08 of its potential returns per unit of risk. Eventide Limited Term Bond is currently generating about 0.09 per unit of risk. If you would invest  5,114  in Citigroup on September 25, 2024 and sell it today you would earn a total of  1,805  from holding Citigroup or generate 35.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Citigroup  vs.  Eventide Limited Term Bond

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Eventide Limited Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eventide Limited Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Eventide Limited 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 Eventide Limited

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

The idea behind Citigroup and Eventide Limited Term Bond 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.