Correlation Between Citigroup and Faraday Copper
Can any of the company-specific risk be diversified away by investing in both Citigroup and Faraday Copper 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 Faraday Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Faraday Copper Corp, you can compare the effects of market volatilities on Citigroup and Faraday Copper 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 Faraday Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Faraday Copper.
Diversification Opportunities for Citigroup and Faraday Copper
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Faraday is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Faraday Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Copper Corp 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 Faraday Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Copper Corp has no effect on the direction of Citigroup i.e., Citigroup and Faraday Copper go up and down completely randomly.
Pair Corralation between Citigroup and Faraday Copper
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.16 times more return on investment than Faraday Copper. However, Citigroup is 1.16 times more volatile than Faraday Copper Corp. It trades about 0.21 of its potential returns per unit of risk. Faraday Copper Corp is currently generating about 0.03 per unit of risk. If you would invest 6,255 in Citigroup on August 24, 2024 and sell it today you would earn a total of 640.00 from holding Citigroup or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Faraday Copper Corp
Performance |
| Timeline |
| Citigroup |
| Faraday Copper Corp |
Citigroup and Faraday Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Faraday Copper
The main advantage of trading using opposite Citigroup and Faraday Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Faraday Copper 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 Faraday Copper will offset losses from the drop in Faraday Copper's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Faraday Copper vs. Arizona Sonoran Copper | Faraday Copper vs. Filo Mining Corp | Faraday Copper vs. Marimaca Copper Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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