Correlation Between Citigroup and 26885BAE0

Can any of the company-specific risk be diversified away by investing in both Citigroup and 26885BAE0 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 26885BAE0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and EQM Midstream Partners, you can compare the effects of market volatilities on Citigroup and 26885BAE0 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 26885BAE0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 26885BAE0.

Diversification Opportunities for Citigroup and 26885BAE0

-0.44

Correlation Coefficient

Citigroup  26885BAE0

Very good diversification

The 3 months correlation between Citigroup and 26885BAE0 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and EQM Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQM Midstream Partners 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 26885BAE0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQM Midstream Partners has no effect on the direction of Citigroup i.e., Citigroup and 26885BAE0 go up and down completely randomly.

Pair Corralation between Citigroup and 26885BAE0

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.53 times more return on investment than 26885BAE0. However, Citigroup is 1.87 times less risky than 26885BAE0. It trades about 0.2 of its potential returns per unit of risk. EQM Midstream Partners is currently generating about -0.12 per unit of risk. If you would invest  5,716  in Citigroup on September 13, 2024 and sell it today you would earn a total of  1,480  from holding Citigroup or generate 25.89% return on investment over 90 days.

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

Citigroup  vs.  EQM Midstream Partners

Citigroup

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) 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.

EQM Midstream Partners

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days EQM Midstream Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for EQM Midstream Partners investors.

Pair Trading with Citigroup and 26885BAE0

The main advantage of trading using opposite Citigroup and 26885BAE0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 26885BAE0 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 26885BAE0 will offset losses from the drop in 26885BAE0's long position.

The idea behind Citigroup and EQM Midstream Partners 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.