Correlation Between Citigroup and Siemens Healthineers

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

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

Diversification Opportunities for Citigroup and Siemens Healthineers

0.22

Correlation Coefficient

Citigroup  Siemens Healthineers

Modest diversification

The 3 months correlation between Citigroup and Siemens is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers 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 Siemens Healthineers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Healthineers has no effect on the direction of Citigroup i.e., Citigroup and Siemens Healthineers go up and down completely randomly.

Pair Corralation between Citigroup and Siemens Healthineers

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.18 times more return on investment than Siemens Healthineers. However, Citigroup is 1.18 times more volatile than Siemens Healthineers AG. It trades about 0.1 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about 0.08 per unit of risk. If you would invest  6,203  in Citigroup on September 23, 2024 and sell it today you would earn a total of  716.00  from holding Citigroup or generate 11.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Citigroup  vs.  Siemens Healthineers AG

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Siemens Healthineers

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Healthineers AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Siemens Healthineers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Siemens Healthineers

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

The idea behind Citigroup and Siemens Healthineers AG 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.