Correlation Between Citigroup and Everest Textile

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

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

Diversification Opportunities for Citigroup and Everest Textile

-0.15

Correlation Coefficient

Citigroup  Everest Textile

Good diversification

The 3 months correlation between Citigroup and Everest is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Everest Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Textile 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 Everest Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Textile has no effect on the direction of Citigroup i.e., Citigroup and Everest Textile go up and down completely randomly.

Pair Corralation between Citigroup and Everest Textile

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.84 times less return on investment than Everest Textile. In addition to that, Citigroup is 2.17 times more volatile than Everest Textile Co. It trades about 0.04 of its total potential returns per unit of risk. Everest Textile Co is currently generating about 0.17 per unit of volatility. If you would invest  705.00  in Everest Textile Co on December 27, 2024 and sell it today you would earn a total of  61.00  from holding Everest Textile Co or generate 8.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Citigroup  vs.  Everest Textile Co

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Everest Textile

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Textile Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Everest Textile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Everest Textile

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

The idea behind Citigroup and Everest Textile Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.