Correlation Between Citigroup and ETRACS 2x

Can any of the company-specific risk be diversified away by investing in both Citigroup and ETRACS 2x 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 ETRACS 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and ETRACS 2x Leveraged, you can compare the effects of market volatilities on Citigroup and ETRACS 2x 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 ETRACS 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ETRACS 2x.

Diversification Opportunities for Citigroup and ETRACS 2x

0.11

Correlation Coefficient

Citigroup  ETRACS 2x

Average diversification

The 3 months correlation between Citigroup and ETRACS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ETRACS 2x Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2x Leveraged 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 ETRACS 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2x Leveraged has no effect on the direction of Citigroup i.e., Citigroup and ETRACS 2x go up and down completely randomly.

Pair Corralation between Citigroup and ETRACS 2x

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times more return on investment than ETRACS 2x. However, Citigroup is 1.37 times more volatile than ETRACS 2x Leveraged. It trades about 0.27 of its potential returns per unit of risk. ETRACS 2x Leveraged is currently generating about 0.03 per unit of risk. If you would invest  7,498  in Citigroup on May 27, 2025 and sell it today you would earn a total of  2,002  from holding Citigroup or generate 26.7% return on investment over 90 days.

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

Citigroup  vs.  ETRACS 2x Leveraged

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

ETRACS 2x Leveraged

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS 2x Leveraged are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, ETRACS 2x is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and ETRACS 2x

The main advantage of trading using opposite Citigroup and ETRACS 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ETRACS 2x 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 ETRACS 2x will offset losses from the drop in ETRACS 2x's long position.

The idea behind Citigroup and ETRACS 2x Leveraged 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.