Correlation Between Citigroup and Eco Depot

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

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

Diversification Opportunities for Citigroup and Eco Depot

0.85

Correlation Coefficient

Citigroup  Eco Depot

Very poor diversification

The 3 months correlation between Citigroup and Eco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Eco Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Depot 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 Eco Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Depot has no effect on the direction of Citigroup i.e., Citigroup and Eco Depot go up and down completely randomly.

Pair Corralation between Citigroup and Eco Depot

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Eco Depot. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 9.42 times less risky than Eco Depot. The stock trades about -0.2 of its potential returns per unit of risk. The Eco Depot is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6.60  in Eco Depot on December 4, 2024 and sell it today you would earn a total of  0.10  from holding Eco Depot or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Eco Depot

Citigroup

Risk-Adjusted Performance

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 April 2025.

Eco Depot

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Depot are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Eco Depot reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Eco Depot

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

The idea behind Citigroup and Eco Depot 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.