Correlation Between Citigroup and First Quantum
Can any of the company-specific risk be diversified away by investing in both Citigroup and First Quantum 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 First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and First Quantum Minerals, you can compare the effects of market volatilities on Citigroup and First Quantum 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 First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and First Quantum.
Diversification Opportunities for Citigroup and First Quantum
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Citigroup i.e., Citigroup and First Quantum go up and down completely randomly.
Pair Corralation between Citigroup and First Quantum
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.54 times more return on investment than First Quantum. However, Citigroup is 1.84 times less risky than First Quantum. It trades about 0.32 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.12 per unit of risk. If you would invest 6,235 in Citigroup on September 5, 2024 and sell it today you would earn a total of 915.00 from holding Citigroup or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. First Quantum Minerals
Performance |
| Timeline |
| Citigroup |
| First Quantum Minerals |
Citigroup and First Quantum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and First Quantum
The main advantage of trading using opposite Citigroup and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, First Quantum 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 First Quantum will offset losses from the drop in First Quantum's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| First Quantum vs. Superior Plus Corp | First Quantum vs. NMI Holdings | First Quantum vs. Origin Agritech | First Quantum vs. SIVERS SEMICONDUCTORS AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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