Correlation Between Citigroup and Providence Resources
Can any of the company-specific risk be diversified away by investing in both Citigroup and Providence 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 Providence Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Providence Resources, you can compare the effects of market volatilities on Citigroup and Providence 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 Providence Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Providence Resources.
Diversification Opportunities for Citigroup and Providence Resources
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Providence is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Providence Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Providence 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 Providence Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Providence Resources has no effect on the direction of Citigroup i.e., Citigroup and Providence Resources go up and down completely randomly.
Pair Corralation between Citigroup and Providence Resources
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.11 times more return on investment than Providence Resources. However, Citigroup is 9.26 times less risky than Providence Resources. It trades about 0.2 of its potential returns per unit of risk. Providence Resources is currently generating about -0.03 per unit of risk. If you would invest 6,412 in Citigroup on August 30, 2024 and sell it today you would earn a total of 604.00 from holding Citigroup or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Providence Resources
Performance |
| Timeline |
| Citigroup |
| Providence Resources |
Citigroup and Providence Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Providence Resources
The main advantage of trading using opposite Citigroup and Providence Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Providence 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 Providence Resources will offset losses from the drop in Providence Resources' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Providence Resources vs. ReoStar Energy Corp | Providence Resources vs. Mogul Energy International | Providence Resources vs. Paradigm Oil And | Providence Resources vs. New Frontier 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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