Correlation Between Citigroup and Fresenius

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

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

Diversification Opportunities for Citigroup and Fresenius

0.15

Correlation Coefficient

Citigroup  Fresenius

Average diversification

The 3 months correlation between Citigroup and Fresenius is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE 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 Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Citigroup i.e., Citigroup and Fresenius go up and down completely randomly.

Pair Corralation between Citigroup and Fresenius

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.57 times less return on investment than Fresenius. In addition to that, Citigroup is 1.36 times more volatile than Fresenius SE Co. It trades about 0.04 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about 0.2 per unit of volatility. If you would invest  3,345  in Fresenius SE Co on December 23, 2024 and sell it today you would earn a total of  622.00  from holding Fresenius SE Co or generate 18.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Fresenius SE Co

Citigroup

Risk-Adjusted Performance

Insignificant

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Fresenius SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fresenius SE Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Fresenius unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Fresenius

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

The idea behind Citigroup and Fresenius SE Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.