Correlation Between Citigroup and CTS Eventim

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

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

Diversification Opportunities for Citigroup and CTS Eventim

0.28

Correlation Coefficient

Citigroup  CTS Eventim

Modest diversification

The 3 months correlation between Citigroup and CTS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CTS Eventim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Eventim AG 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 CTS Eventim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Eventim AG has no effect on the direction of Citigroup i.e., Citigroup and CTS Eventim go up and down completely randomly.

Pair Corralation between Citigroup and CTS Eventim

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.08 times less return on investment than CTS Eventim. In addition to that, Citigroup is 1.35 times more volatile than CTS Eventim AG. It trades about 0.04 of its total potential returns per unit of risk. CTS Eventim AG is currently generating about 0.23 per unit of volatility. If you would invest  8,270  in CTS Eventim AG on December 27, 2024 and sell it today you would earn a total of  1,860  from holding CTS Eventim AG or generate 22.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Citigroup  vs.  CTS Eventim AG

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CTS Eventim AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Eventim AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CTS Eventim reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and CTS Eventim

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

The idea behind Citigroup and CTS Eventim AG 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.