Correlation Between Citigroup and Siemens

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

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

Diversification Opportunities for Citigroup and Siemens

-0.04

Correlation Coefficient

Citigroup  Siemens

Good diversification

The 3 months correlation between Citigroup and Siemens is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Siemens Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Limited 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 Siemens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Limited has no effect on the direction of Citigroup i.e., Citigroup and Siemens go up and down completely randomly.

Pair Corralation between Citigroup and Siemens

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.78 times more return on investment than Siemens. However, Citigroup is 1.28 times less risky than Siemens. It trades about 0.11 of its potential returns per unit of risk. Siemens Limited is currently generating about -0.14 per unit of risk. If you would invest  6,543  in Citigroup on October 12, 2024 and sell it today you would earn a total of  783.00  from holding Citigroup or generate 11.97% return on investment over 90 days.

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

Citigroup  vs.  Siemens Limited

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Siemens Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siemens Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and Siemens

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

The idea behind Citigroup and Siemens Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.