Correlation Between Citigroup and Evolve Automobile

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

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

Diversification Opportunities for Citigroup and Evolve Automobile

0.29

Correlation Coefficient

Citigroup  Evolve Automobile

Modest diversification

The 3 months correlation between Citigroup and Evolve is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Evolve Automobile Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Automobile 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 Evolve Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Automobile has no effect on the direction of Citigroup i.e., Citigroup and Evolve Automobile go up and down completely randomly.

Pair Corralation between Citigroup and Evolve Automobile

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.2 times more return on investment than Evolve Automobile. However, Citigroup is 1.2 times more volatile than Evolve Automobile Innovation. It trades about 0.13 of its potential returns per unit of risk. Evolve Automobile Innovation is currently generating about 0.09 per unit of risk. If you would invest  6,092  in Citigroup on September 3, 2024 and sell it today you would earn a total of  995.00  from holding Citigroup or generate 16.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Evolve Automobile Innovation

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Evolve Automobile

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Citigroup and Evolve Automobile

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

The idea behind Citigroup and Evolve Automobile Innovation 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.