Correlation Between Citigroup and Echiquier Major

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

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

Diversification Opportunities for Citigroup and Echiquier Major

0.24

Correlation Coefficient

Citigroup  Echiquier Major

Modest diversification

The 3 months correlation between Citigroup and Echiquier is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Echiquier Major SRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echiquier Major SRI 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 Echiquier Major. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echiquier Major SRI has no effect on the direction of Citigroup i.e., Citigroup and Echiquier Major go up and down completely randomly.

Pair Corralation between Citigroup and Echiquier Major

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.22 times less return on investment than Echiquier Major. In addition to that, Citigroup is 1.67 times more volatile than Echiquier Major SRI. It trades about 0.02 of its total potential returns per unit of risk. Echiquier Major SRI is currently generating about 0.2 per unit of volatility. If you would invest  40,352  in Echiquier Major SRI on September 22, 2024 and sell it today you would earn a total of  1,322  from holding Echiquier Major SRI or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Echiquier Major SRI

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 unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Echiquier Major SRI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Echiquier Major SRI are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Echiquier Major is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Echiquier Major

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

The idea behind Citigroup and Echiquier Major SRI 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.