Correlation Between Citigroup and Evolve Future

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

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

Diversification Opportunities for Citigroup and Evolve Future

0.88

Correlation Coefficient

Citigroup  Evolve Future

Very poor diversification

The 3 months correlation between Citigroup and Evolve is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Evolve Future Leadership in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Future Leadership 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 Evolve Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Future Leadership has no effect on the direction of Citigroup i.e., Citigroup and Evolve Future go up and down completely randomly.

Pair Corralation between Citigroup and Evolve Future

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.27 times more return on investment than Evolve Future. However, Citigroup is 1.27 times more volatile than Evolve Future Leadership. It trades about 0.07 of its potential returns per unit of risk. Evolve Future Leadership is currently generating about 0.07 per unit of risk. If you would invest  6,334  in Citigroup on October 10, 2024 and sell it today you would earn a total of  1,034  from holding Citigroup or generate 16.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Evolve Future Leadership

Citigroup

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

Evolve Future Leadership

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Future Leadership are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Future displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Evolve Future

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

The idea behind Citigroup and Evolve Future Leadership 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.