Correlation Between Citigroup and Embecta Corp

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

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

Diversification Opportunities for Citigroup and Embecta Corp

-0.45

Correlation Coefficient

Citigroup  Embecta Corp

Very good diversification

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

Pair Corralation between Citigroup and Embecta Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.36 times more return on investment than Embecta Corp. However, Citigroup is 2.78 times less risky than Embecta Corp. It trades about 0.32 of its potential returns per unit of risk. Embecta Corp is currently generating about -0.06 per unit of risk. If you would invest  7,003  in Citigroup on May 2, 2025 and sell it today you would earn a total of  2,367  from holding Citigroup or generate 33.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Embecta Corp

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Embecta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embecta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Citigroup and Embecta Corp

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

The idea behind Citigroup and Embecta Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.