Correlation Between Citigroup and Midland Exploration
Can any of the company-specific risk be diversified away by investing in both Citigroup and Midland Exploration 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 Midland Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Midland Exploration, you can compare the effects of market volatilities on Citigroup and Midland Exploration 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 Midland Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Midland Exploration.
Diversification Opportunities for Citigroup and Midland Exploration
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Midland is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Midland Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland Exploration 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 Midland Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland Exploration has no effect on the direction of Citigroup i.e., Citigroup and Midland Exploration go up and down completely randomly.
Pair Corralation between Citigroup and Midland Exploration
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.44 times more return on investment than Midland Exploration. However, Citigroup is 2.27 times less risky than Midland Exploration. It trades about 0.06 of its potential returns per unit of risk. Midland Exploration is currently generating about -0.01 per unit of risk. If you would invest 4,733 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,251 from holding Citigroup or generate 47.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Citigroup vs. Midland Exploration
Performance |
| Timeline |
| Citigroup |
| Midland Exploration |
Citigroup and Midland Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Midland Exploration
The main advantage of trading using opposite Citigroup and Midland Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Midland Exploration 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 Midland Exploration will offset losses from the drop in Midland Exploration's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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