Correlation Between Citigroup and Europower Enerji

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

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

Diversification Opportunities for Citigroup and Europower Enerji

0.77

Correlation Coefficient

Citigroup  Europower Enerji

Poor diversification

The 3 months correlation between Citigroup and Europower is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Europower Enerji ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europower Enerji 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 Europower Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europower Enerji has no effect on the direction of Citigroup i.e., Citigroup and Europower Enerji go up and down completely randomly.

Pair Corralation between Citigroup and Europower Enerji

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.54 times more return on investment than Europower Enerji. However, Citigroup is 1.84 times less risky than Europower Enerji. It trades about -0.04 of its potential returns per unit of risk. Europower Enerji ve is currently generating about -0.08 per unit of risk. If you would invest  6,900  in Citigroup on September 19, 2024 and sell it today you would lose (88.00) from holding Citigroup or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Citigroup  vs.  Europower Enerji ve

Citigroup

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) 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 January 2025.

Europower Enerji

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Europower Enerji ve are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Europower Enerji demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Europower Enerji

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

The idea behind Citigroup and Europower Enerji ve 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 CEOs Directory module to screen CEOs from public companies around the world.