Correlation Between Citigroup and EasyETF BNP

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

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

Diversification Opportunities for Citigroup and EasyETF BNP

0.84

Correlation Coefficient

Citigroup  EasyETF BNP

Very poor diversification

The 3 months correlation between Citigroup and EasyETF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and EasyETF BNP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyETF BNP 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 EasyETF BNP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EasyETF BNP has no effect on the direction of Citigroup i.e., Citigroup and EasyETF BNP go up and down completely randomly.

Pair Corralation between Citigroup and EasyETF BNP

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.52 times more return on investment than EasyETF BNP. However, Citigroup is 2.52 times more volatile than EasyETF BNP. It trades about 0.24 of its potential returns per unit of risk. EasyETF BNP is currently generating about 0.1 per unit of risk. If you would invest  7,075  in Citigroup on October 26, 2024 and sell it today you would earn a total of  1,112  from holding Citigroup or generate 15.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.56%
Values	Daily Returns

Citigroup  vs.  EasyETF BNP

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

EasyETF BNP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EasyETF BNP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, EasyETF BNP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and EasyETF BNP

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

The idea behind Citigroup and EasyETF BNP 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.