Correlation Between Eltek and CITIGROUP

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

By analyzing existing cross correlation between Eltek and CITIGROUP FDG INC, you can compare the effects of market volatilities on Eltek and CITIGROUP 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 Eltek with a short position of CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and CITIGROUP.

Diversification Opportunities for Eltek and CITIGROUP

0.44

Correlation Coefficient

Eltek  CITIGROUP

Very weak diversification

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

Pair Corralation between Eltek and CITIGROUP

Given the investment horizon of 90 days Eltek is expected to generate 3.42 times more return on investment than CITIGROUP. However, Eltek is 3.42 times more volatile than CITIGROUP FDG INC. It trades about 0.03 of its potential returns per unit of risk. CITIGROUP FDG INC is currently generating about -0.18 per unit of risk. If you would invest  1,074  in Eltek on September 26, 2024 and sell it today you would earn a total of  26.00  from holding Eltek or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	26.98%
Values	Daily Returns

Eltek  vs.  CITIGROUP FDG INC

Eltek

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eltek is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

CITIGROUP FDG INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIGROUP FDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Bond's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for CITIGROUP FDG INC private investors.

Pair Trading with Eltek and CITIGROUP

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

The idea behind Eltek and CITIGROUP FDG INC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.