Correlation Between Citigroup and VanEck Vietnam

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

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

Diversification Opportunities for Citigroup and VanEck Vietnam

-0.42

Correlation Coefficient

Citigroup  VanEck Vietnam

Very good diversification

The 3 months correlation between Citigroup and VanEck is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VanEck Vietnam ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vietnam ETF 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 VanEck Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vietnam ETF has no effect on the direction of Citigroup i.e., Citigroup and VanEck Vietnam go up and down completely randomly.

Pair Corralation between Citigroup and VanEck Vietnam

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.71 times less return on investment than VanEck Vietnam. In addition to that, Citigroup is 1.99 times more volatile than VanEck Vietnam ETF. It trades about 0.03 of its total potential returns per unit of risk. VanEck Vietnam ETF is currently generating about 0.14 per unit of volatility. If you would invest  1,154  in VanEck Vietnam ETF on December 27, 2024 and sell it today you would earn a total of  95.00  from holding VanEck Vietnam ETF or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  VanEck Vietnam ETF

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

VanEck Vietnam ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vietnam ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, VanEck Vietnam may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and VanEck Vietnam

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

The idea behind Citigroup and VanEck Vietnam ETF 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.