Correlation Between Citigroup and Cambria Emerging

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

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

Diversification Opportunities for Citigroup and Cambria Emerging

0.92

Correlation Coefficient

Citigroup  Cambria Emerging

Almost no diversification

The 3 months correlation between Citigroup and Cambria is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cambria Emerging Shareholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Emerging Sha 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 Cambria Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Emerging Sha has no effect on the direction of Citigroup i.e., Citigroup and Cambria Emerging go up and down completely randomly.

Pair Corralation between Citigroup and Cambria Emerging

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.87 times more return on investment than Cambria Emerging. However, Citigroup is 1.87 times more volatile than Cambria Emerging Shareholder. It trades about 0.31 of its potential returns per unit of risk. Cambria Emerging Shareholder is currently generating about 0.19 per unit of risk. If you would invest  6,947  in Citigroup on May 6, 2025 and sell it today you would earn a total of  2,236  from holding Citigroup or generate 32.19% return on investment over 90 days.

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

Citigroup  vs.  Cambria Emerging Shareholder

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 24 (%) 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.

Cambria Emerging Sha

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Emerging Shareholder are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Cambria Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Citigroup and Cambria Emerging

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

The idea behind Citigroup and Cambria Emerging Shareholder 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.