Correlation Between Citigroup and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both Citigroup and Prairie Provident 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 Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Prairie Provident Resources, you can compare the effects of market volatilities on Citigroup and Prairie Provident 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 Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Prairie Provident.
Diversification Opportunities for Citigroup and Prairie Provident
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Prairie is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident 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 Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of Citigroup i.e., Citigroup and Prairie Provident go up and down completely randomly.
Pair Corralation between Citigroup and Prairie Provident
Taking into account the 90-day investment horizon Citigroup is expected to generate 10.46 times less return on investment than Prairie Provident. But when comparing it to its historical volatility, Citigroup is 14.94 times less risky than Prairie Provident. It trades about 0.18 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2.50 in Prairie Provident Resources on September 12, 2024 and sell it today you would earn a total of 0.50 from holding Prairie Provident Resources or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Prairie Provident Resources
Performance |
| Timeline |
| Citigroup |
| Prairie Provident |
Citigroup and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Prairie Provident
The main advantage of trading using opposite Citigroup and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Prairie Provident vs. Pine Cliff Energy | Prairie Provident vs. InPlay Oil Corp | Prairie Provident vs. Journey Energy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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