Correlation Between Citigroup and Investec Emerging

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

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

Diversification Opportunities for Citigroup and Investec Emerging

0.95

Correlation Coefficient

Citigroup  Investec Emerging

Almost no diversification

The 3 months correlation between Citigroup and Investec is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets 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 Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Citigroup i.e., Citigroup and Investec Emerging go up and down completely randomly.

Pair Corralation between Citigroup and Investec Emerging

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.14 times more return on investment than Investec Emerging. However, Citigroup is 2.14 times more volatile than Investec Emerging Markets. It trades about 0.32 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.26 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 Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Investec Emerging Markets

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.

Investec Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Emerging Markets are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Investec Emerging may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Citigroup and Investec Emerging

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

The idea behind Citigroup and Investec Emerging Markets 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.