Correlation Between Citigroup and EQ Oyj

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

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

Diversification Opportunities for Citigroup and EQ Oyj

-0.87

Correlation Coefficient

Citigroup  EQ Oyj

Pay attention - limited upside

The 3 months correlation between Citigroup and EQV1V is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and eQ Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eQ Oyj 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 EQ Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eQ Oyj has no effect on the direction of Citigroup i.e., Citigroup and EQ Oyj go up and down completely randomly.

Pair Corralation between Citigroup and EQ Oyj

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the EQ Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.18 times less risky than EQ Oyj. The stock trades about -0.04 of its potential returns per unit of risk. The eQ Oyj is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,260  in eQ Oyj on October 8, 2024 and sell it today you would earn a total of  5.00  from holding eQ Oyj or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	84.21%
Values	Daily Returns

Citigroup  vs.  eQ Oyj

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

eQ Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eQ Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Citigroup and EQ Oyj

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

The idea behind Citigroup and eQ Oyj 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.