Correlation Between Citigroup and Izmir Demir

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

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

Diversification Opportunities for Citigroup and Izmir Demir

0.22

Correlation Coefficient

Citigroup  Izmir Demir

Modest diversification

The 3 months correlation between Citigroup and Izmir is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Izmir Demir Celik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izmir Demir Celik 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 Izmir Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izmir Demir Celik has no effect on the direction of Citigroup i.e., Citigroup and Izmir Demir go up and down completely randomly.

Pair Corralation between Citigroup and Izmir Demir

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Izmir Demir. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.35 times less risky than Izmir Demir. The stock trades about -0.09 of its potential returns per unit of risk. The Izmir Demir Celik is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  535.00  in Izmir Demir Celik on September 24, 2024 and sell it today you would earn a total of  39.00  from holding Izmir Demir Celik or generate 7.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Izmir Demir Celik

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Izmir Demir Celik

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Izmir Demir Celik are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Izmir Demir is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Izmir Demir

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

The idea behind Citigroup and Izmir Demir Celik 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.