Correlation Between Citigroup and BCM Resources
Can any of the company-specific risk be diversified away by investing in both Citigroup and BCM Resources 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 BCM Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BCM Resources, you can compare the effects of market volatilities on Citigroup and BCM Resources 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 BCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BCM Resources.
Diversification Opportunities for Citigroup and BCM Resources
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and BCM is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BCM Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCM Resources 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 BCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCM Resources has no effect on the direction of Citigroup i.e., Citigroup and BCM Resources go up and down completely randomly.
Pair Corralation between Citigroup and BCM Resources
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.64 times less return on investment than BCM Resources. But when comparing it to its historical volatility, Citigroup is 5.36 times less risky than BCM Resources. It trades about 0.26 of its potential returns per unit of risk. BCM Resources is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2.00 in BCM Resources on September 1, 2024 and sell it today you would earn a total of 1.53 from holding BCM Resources or generate 76.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Citigroup vs. BCM Resources
Performance |
| Timeline |
| Citigroup |
| BCM Resources |
Citigroup and BCM Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BCM Resources
The main advantage of trading using opposite Citigroup and BCM Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BCM Resources 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 BCM Resources will offset losses from the drop in BCM Resources' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| BCM Resources vs. Liontown Resources Limited | BCM Resources vs. ATT Inc | BCM Resources vs. Merck Company | BCM Resources vs. Walt Disney |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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