Correlation Between Citigroup and EatonPLC
Can any of the company-specific risk be diversified away by investing in both Citigroup and EatonPLC 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 EatonPLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Eaton PLC, you can compare the effects of market volatilities on Citigroup and EatonPLC 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 EatonPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and EatonPLC.
Diversification Opportunities for Citigroup and EatonPLC
Almost no diversification
The 3 months correlation between Citigroup and EatonPLC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC 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 EatonPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Citigroup i.e., Citigroup and EatonPLC go up and down completely randomly.
Pair Corralation between Citigroup and EatonPLC
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.59 times less return on investment than EatonPLC. In addition to that, Citigroup is 1.01 times more volatile than Eaton PLC. It trades about 0.17 of its total potential returns per unit of risk. Eaton PLC is currently generating about 0.27 per unit of volatility. If you would invest 25,467 in Eaton PLC on September 6, 2024 and sell it today you would earn a total of 9,763 from holding Eaton PLC or generate 38.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Eaton PLC
Performance |
Timeline |
Citigroup |
Eaton PLC |
Citigroup and EatonPLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and EatonPLC
The main advantage of trading using opposite Citigroup and EatonPLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, EatonPLC 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 EatonPLC will offset losses from the drop in EatonPLC's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
EatonPLC vs. CARSALESCOM | EatonPLC vs. Gladstone Investment | EatonPLC vs. Motorcar Parts of | EatonPLC vs. SLR Investment Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Global Correlations Find global opportunities by holding instruments from different markets |