Correlation Between Citigroup and Evertz Technologies

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

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

Diversification Opportunities for Citigroup and Evertz Technologies

0.49

Correlation Coefficient

Citigroup  Evertz Technologies

Very weak diversification

The 3 months correlation between Citigroup and Evertz is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies 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 Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Citigroup i.e., Citigroup and Evertz Technologies go up and down completely randomly.

Pair Corralation between Citigroup and Evertz Technologies

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.64 times more return on investment than Evertz Technologies. However, Citigroup is 1.64 times more volatile than Evertz Technologies Limited. It trades about 0.21 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about 0.13 per unit of risk. If you would invest  5,683  in Citigroup on September 12, 2024 and sell it today you would earn a total of  1,567  from holding Citigroup or generate 27.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Evertz Technologies Limited

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Evertz Technologies

Risk-Adjusted Performance

10 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Evertz Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Evertz Technologies

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

The idea behind Citigroup and Evertz Technologies Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.