Correlation Between Citigroup and A-Cap Energy
Can any of the company-specific risk be diversified away by investing in both Citigroup and A-Cap Energy 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 A-Cap Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and A Cap Energy Limited, you can compare the effects of market volatilities on Citigroup and A-Cap Energy 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 A-Cap Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and A-Cap Energy.
Diversification Opportunities for Citigroup and A-Cap Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and A-Cap is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and A Cap Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Cap Energy 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 A-Cap Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Cap Energy has no effect on the direction of Citigroup i.e., Citigroup and A-Cap Energy go up and down completely randomly.
Pair Corralation between Citigroup and A-Cap Energy
Taking into account the 90-day investment horizon Citigroup is expected to generate 10.52 times less return on investment than A-Cap Energy. But when comparing it to its historical volatility, Citigroup is 13.7 times less risky than A-Cap Energy. It trades about 0.07 of its potential returns per unit of risk. A Cap Energy Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.00 in A Cap Energy Limited on August 24, 2024 and sell it today you would lose (3.40) from holding A Cap Energy Limited or give up 56.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.85% |
| Values | Daily Returns |
Citigroup vs. A Cap Energy Limited
Performance |
| Timeline |
| Citigroup |
| A Cap Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and A-Cap Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and A-Cap Energy
The main advantage of trading using opposite Citigroup and A-Cap Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, A-Cap Energy 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 A-Cap Energy will offset losses from the drop in A-Cap Energy's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| A-Cap Energy vs. Champion Bear Resources | A-Cap Energy vs. Aurelia Metals Limited | A-Cap Energy vs. Baroyeca Gold Silver | A-Cap Energy vs. Centaurus Metals Limited |
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 the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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