Correlation Between Citigroup and Ideanomics

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

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

Diversification Opportunities for Citigroup and Ideanomics

-0.11

Correlation Coefficient

Citigroup  Ideanomics

Good diversification

The 3 months correlation between Citigroup and Ideanomics is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ideanomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideanomics 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 Ideanomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideanomics has no effect on the direction of Citigroup i.e., Citigroup and Ideanomics go up and down completely randomly.

Pair Corralation between Citigroup and Ideanomics

Taking into account the 90-day investment horizon Citigroup is expected to generate 7.2 times less return on investment than Ideanomics. But when comparing it to its historical volatility, Citigroup is 15.8 times less risky than Ideanomics. It trades about 0.08 of its potential returns per unit of risk. Ideanomics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,802  in Ideanomics on September 18, 2024 and sell it today you would lose (1,802) from holding Ideanomics or give up 99.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  Ideanomics

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

Ideanomics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ideanomics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Ideanomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Ideanomics

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

The idea behind Citigroup and Ideanomics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.