Correlation Between Citigroup and Eagle Capital

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

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

Diversification Opportunities for Citigroup and Eagle Capital

0.69

Correlation Coefficient

Citigroup  Eagle Capital

Poor diversification

The 3 months correlation between Citigroup and Eagle is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Eagle Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Capital Apprec 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 Eagle Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Capital Apprec has no effect on the direction of Citigroup i.e., Citigroup and Eagle Capital go up and down completely randomly.

Pair Corralation between Citigroup and Eagle Capital

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.43 times more return on investment than Eagle Capital. However, Citigroup is 2.35 times less risky than Eagle Capital. It trades about -0.06 of its potential returns per unit of risk. Eagle Capital Appreciation is currently generating about -0.21 per unit of risk. If you would invest  7,215  in Citigroup on October 7, 2024 and sell it today you would lose (115.00) from holding Citigroup or give up 1.59% of portfolio value over 90 days.

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

Citigroup  vs.  Eagle Capital Appreciation

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Eagle Capital Apprec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Capital Appreciation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Eagle Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Eagle Capital

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

The idea behind Citigroup and Eagle Capital Appreciation 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.