Correlation Between CITIGROUP CDR and EQB

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

By analyzing existing cross correlation between CITIGROUP CDR and EQB Inc, you can compare the effects of market volatilities on CITIGROUP CDR and EQB 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 CDR with a short position of EQB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIGROUP CDR and EQB.

Diversification Opportunities for CITIGROUP CDR and EQB

0.75

Correlation Coefficient

CITIGROUP CDR  EQB

Poor diversification

The 3 months correlation between CITIGROUP and EQB is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CITIGROUP CDR and EQB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQB Inc and CITIGROUP CDR 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 CDR are associated (or correlated) with EQB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQB Inc has no effect on the direction of CITIGROUP CDR i.e., CITIGROUP CDR and EQB go up and down completely randomly.

Pair Corralation between CITIGROUP CDR and EQB

Assuming the 90 days trading horizon CITIGROUP CDR is expected to generate 0.91 times more return on investment than EQB. However, CITIGROUP CDR is 1.1 times less risky than EQB. It trades about 0.39 of its potential returns per unit of risk. EQB Inc is currently generating about 0.12 per unit of risk. If you would invest  2,699  in CITIGROUP CDR on April 22, 2025 and sell it today you would earn a total of  1,217  from holding CITIGROUP CDR or generate 45.09% return on investment over 90 days.

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

CITIGROUP CDR  vs.  EQB Inc

CITIGROUP CDR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, CITIGROUP CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

EQB Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EQB Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, EQB displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIGROUP CDR and EQB

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

The idea behind CITIGROUP CDR and EQB 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.