Correlation Between Citigroup and EAGLE

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

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

Diversification Opportunities for Citigroup and EAGLE

-0.45

Correlation Coefficient

Citigroup  EAGLE

Very good diversification

The 3 months correlation between Citigroup and EAGLE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and EAGLE MATERIALS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS INC 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 EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAGLE MATERIALS INC has no effect on the direction of Citigroup i.e., Citigroup and EAGLE go up and down completely randomly.

Pair Corralation between Citigroup and EAGLE

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.89 times more return on investment than EAGLE. However, Citigroup is 4.89 times more volatile than EAGLE MATERIALS INC. It trades about 0.24 of its potential returns per unit of risk. EAGLE MATERIALS INC is currently generating about -0.08 per unit of risk. If you would invest  6,129  in Citigroup on October 21, 2024 and sell it today you would earn a total of  1,870  from holding Citigroup or generate 30.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  EAGLE MATERIALS INC

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

EAGLE MATERIALS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAGLE MATERIALS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EAGLE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and EAGLE

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

The idea behind Citigroup and EAGLE MATERIALS INC 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 Stocks Directory module to find actively traded stocks across global markets.