Correlation Between Citigroup and Globe Metals
Can any of the company-specific risk be diversified away by investing in both Citigroup and Globe Metals 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 Globe Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Globe Metals Mining, you can compare the effects of market volatilities on Citigroup and Globe Metals 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 Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Globe Metals.
Diversification Opportunities for Citigroup and Globe Metals
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Globe is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Globe Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Metals Mining 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 Globe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Metals Mining has no effect on the direction of Citigroup i.e., Citigroup and Globe Metals go up and down completely randomly.
Pair Corralation between Citigroup and Globe Metals
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.36 times more return on investment than Globe Metals. However, Citigroup is 2.77 times less risky than Globe Metals. It trades about 0.45 of its potential returns per unit of risk. Globe Metals Mining is currently generating about -0.03 per unit of risk. If you would invest 6,842 in Citigroup on October 20, 2024 and sell it today you would earn a total of 1,157 from holding Citigroup or generate 16.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Globe Metals Mining
Performance |
| Timeline |
| Citigroup |
| Globe Metals Mining |
Citigroup and Globe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Globe Metals
The main advantage of trading using opposite Citigroup and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Globe Metals 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 Globe Metals will offset losses from the drop in Globe Metals' long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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