Correlation Between Citigroup and ING Groep

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Can any of the company-specific risk be diversified away by investing in both Citigroup and ING Groep 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 ING Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and ING Groep NV, you can compare the effects of market volatilities on Citigroup and ING Groep 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 ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ING Groep.

Diversification Opportunities for Citigroup and ING Groep

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Citigroup and ING Groep is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Citigroup i.e., Citigroup and ING Groep go up and down completely randomly.

Pair Corralation between Citigroup and ING Groep

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times less return on investment than ING Groep. But when comparing it to its historical volatility, Citigroup is 1.52 times less risky than ING Groep. It trades about 0.13 of its potential returns per unit of risk. ING Groep NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  910.00  in ING Groep NV on May 21, 2022 and sell it today you would earn a total of  33.00  from holding ING Groep NV or generate 3.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Citigroup  vs.  ING Groep NV

 Performance (%) 
       Timeline  
Citigroup 
Citigroup Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Citigroup Price Channel

ING Groep NV 
ING Groep Performance
0 of 100
Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ING Groep Price Channel

Citigroup and ING Groep Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and ING Groep

The main advantage of trading using opposite Citigroup and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ING Groep 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 ING Groep will offset losses from the drop in ING Groep's long position.
The idea behind Citigroup and ING Groep NV 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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