Correlation Between Citigroup and Pace Metals
Can any of the company-specific risk be diversified away by investing in both Citigroup and Pace 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 Pace Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Pace Metals, you can compare the effects of market volatilities on Citigroup and Pace 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 Pace Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Pace Metals.
Diversification Opportunities for Citigroup and Pace Metals
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Pace is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pace Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace 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 Pace Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Metals has no effect on the direction of Citigroup i.e., Citigroup and Pace Metals go up and down completely randomly.
Pair Corralation between Citigroup and Pace Metals
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.04 times less return on investment than Pace Metals. But when comparing it to its historical volatility, Citigroup is 9.77 times less risky than Pace Metals. It trades about 0.09 of its potential returns per unit of risk. Pace Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Pace Metals on October 12, 2024 and sell it today you would lose (14.00) from holding Pace Metals or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Citigroup vs. Pace Metals
Performance |
| Timeline |
| Citigroup |
| Pace Metals |
Citigroup and Pace Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Pace Metals
The main advantage of trading using opposite Citigroup and Pace Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pace 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 Pace Metals will offset losses from the drop in Pace Metals' long position.| Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Nu Holdings | Citigroup vs. Canadian Imperial Bank |
| Pace Metals vs. Eddy Smart Home | Pace Metals vs. Royal Bank of | Pace Metals vs. Definity Financial Corp | Pace Metals vs. HPQ Silicon Resources |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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