Correlation Between Citigroup and Mkango Resources
Can any of the company-specific risk be diversified away by investing in both Citigroup and Mkango 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 Mkango Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Mkango Resources, you can compare the effects of market volatilities on Citigroup and Mkango 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 Mkango Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Mkango Resources.
Diversification Opportunities for Citigroup and Mkango Resources
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Mkango is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Mkango Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mkango 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 Mkango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mkango Resources has no effect on the direction of Citigroup i.e., Citigroup and Mkango Resources go up and down completely randomly.
Pair Corralation between Citigroup and Mkango Resources
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.32 times more return on investment than Mkango Resources. However, Citigroup is 3.1 times less risky than Mkango Resources. It trades about 0.12 of its potential returns per unit of risk. Mkango Resources is currently generating about 0.01 per unit of risk. If you would invest 4,004 in Citigroup on September 12, 2024 and sell it today you would earn a total of 3,200 from holding Citigroup or generate 79.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.1% |
| Values | Daily Returns |
Citigroup vs. Mkango Resources
Performance |
| Timeline |
| Citigroup |
| Mkango Resources |
Citigroup and Mkango Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Mkango Resources
The main advantage of trading using opposite Citigroup and Mkango Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Mkango 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 Mkango Resources will offset losses from the drop in Mkango Resources' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Mkango Resources vs. Albion Technology General | Mkango Resources vs. Darden Restaurants | Mkango Resources vs. Polar Capital Technology | Mkango Resources vs. Sunny Optical Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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