Correlation Between Citigroup and Surge Battery
Can any of the company-specific risk be diversified away by investing in both Citigroup and Surge Battery 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 Surge Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Surge Battery Metals, you can compare the effects of market volatilities on Citigroup and Surge Battery 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 Surge Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Surge Battery.
Diversification Opportunities for Citigroup and Surge Battery
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Surge is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Surge Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Battery Metals 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 Surge Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Battery Metals has no effect on the direction of Citigroup i.e., Citigroup and Surge Battery go up and down completely randomly.
Pair Corralation between Citigroup and Surge Battery
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.47 times more return on investment than Surge Battery. However, Citigroup is 2.14 times less risky than Surge Battery. It trades about 0.21 of its potential returns per unit of risk. Surge Battery Metals is currently generating about -0.29 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Surge Battery Metals
Performance |
| Timeline |
| Citigroup |
| Surge Battery Metals |
Citigroup and Surge Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Surge Battery
The main advantage of trading using opposite Citigroup and Surge Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Surge Battery 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 Surge Battery will offset losses from the drop in Surge Battery's long position.The idea behind Citigroup and Surge Battery Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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