Correlation Between Citigroup and ProAm Explorations
Can any of the company-specific risk be diversified away by investing in both Citigroup and ProAm Explorations 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 ProAm Explorations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and ProAm Explorations Corp, you can compare the effects of market volatilities on Citigroup and ProAm Explorations 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 ProAm Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ProAm Explorations.
Diversification Opportunities for Citigroup and ProAm Explorations
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and ProAm is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ProAm Explorations Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAm Explorations Corp 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 ProAm Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAm Explorations Corp has no effect on the direction of Citigroup i.e., Citigroup and ProAm Explorations go up and down completely randomly.
Pair Corralation between Citigroup and ProAm Explorations
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.96 times less return on investment than ProAm Explorations. But when comparing it to its historical volatility, Citigroup is 8.09 times less risky than ProAm Explorations. It trades about 0.11 of its potential returns per unit of risk. ProAm Explorations Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.00 in ProAm Explorations Corp on September 3, 2024 and sell it today you would lose (1.00) from holding ProAm Explorations Corp or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. ProAm Explorations Corp
Performance |
| Timeline |
| Citigroup |
| ProAm Explorations Corp |
Citigroup and ProAm Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and ProAm Explorations
The main advantage of trading using opposite Citigroup and ProAm Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ProAm Explorations 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 ProAm Explorations will offset losses from the drop in ProAm Explorations' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| ProAm Explorations vs. Pason Systems | ProAm Explorations vs. Quarterhill | ProAm Explorations vs. Westaim Corp |
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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