Correlation Between Citigroup and Encision
Can any of the company-specific risk be diversified away by investing in both Citigroup and Encision 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 Encision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Encision, you can compare the effects of market volatilities on Citigroup and Encision 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 Encision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Encision.
Diversification Opportunities for Citigroup and Encision
Modest diversification
The 3 months correlation between Citigroup and Encision is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Encision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encision 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 Encision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encision has no effect on the direction of Citigroup i.e., Citigroup and Encision go up and down completely randomly.
Pair Corralation between Citigroup and Encision
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.51 times more return on investment than Encision. However, Citigroup is 1.97 times less risky than Encision. It trades about 0.07 of its potential returns per unit of risk. Encision is currently generating about -0.01 per unit of risk. If you would invest 4,381 in Citigroup on September 29, 2024 and sell it today you would earn a total of 2,719 from holding Citigroup or generate 62.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 27.22% |
Values | Daily Returns |
Citigroup vs. Encision
Performance |
Timeline |
Citigroup |
Encision |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Encision Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Encision
The main advantage of trading using opposite Citigroup and Encision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Encision 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 Encision will offset losses from the drop in Encision's long position.The idea behind Citigroup and Encision 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.Encision vs. Procyon | Encision vs. Environmmtl Tectonic | Encision vs. SCI Engineered Materials | Encision vs. Electronic Control Security |
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.
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