Correlation Between ING Group and Citigroup

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Can any of the company-specific risk be diversified away by investing in both ING Group and Citigroup 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 ING Group and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Group NV and Citigroup, you can compare the effects of market volatilities on ING Group and Citigroup 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 ING Group with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Group and Citigroup.

Diversification Opportunities for ING Group and Citigroup

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ING and Citigroup is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ING Group NV and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and ING Group 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 ING Group NV are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of ING Group i.e., ING Group and Citigroup go up and down completely randomly.

Pair Corralation between ING Group and Citigroup

Considering the 90-day investment horizon ING Group is expected to generate 1.0 times less return on investment than Citigroup. In addition to that, ING Group is 1.07 times more volatile than Citigroup. It trades about 0.1 of its total potential returns per unit of risk. Citigroup is currently generating about 0.11 per unit of volatility. If you would invest  4,407  in Citigroup on December 30, 2023 and sell it today you would earn a total of  1,917  from holding Citigroup or generate 43.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ING Group NV  vs.  Citigroup

 Performance 
       Timeline  
ING Group NV 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
Market Crasher
Compared to the overall equity markets, risk-adjusted returns on investments in ING Group NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ING Group may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Citigroup 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

ING Group and Citigroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ING Group and Citigroup

The main advantage of trading using opposite ING Group and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Group position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.
The idea behind ING Group NV and Citigroup 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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