Correlation Between Citigroup and Red Moon
Can any of the company-specific risk be diversified away by investing in both Citigroup and Red Moon 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 Red Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Red Moon Resources, you can compare the effects of market volatilities on Citigroup and Red Moon 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 Red Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Red Moon.
Diversification Opportunities for Citigroup and Red Moon
Pay attention - limited upside
The 3 months correlation between Citigroup and Red is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Red Moon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Moon 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 Red Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Moon Resources has no effect on the direction of Citigroup i.e., Citigroup and Red Moon go up and down completely randomly.
Pair Corralation between Citigroup and Red Moon
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.38 times more return on investment than Red Moon. However, Citigroup is 2.62 times less risky than Red Moon. It trades about 0.06 of its potential returns per unit of risk. Red Moon Resources is currently generating about -0.03 per unit of risk. If you would invest 4,651 in Citigroup on September 1, 2024 and sell it today you would earn a total of 2,436 from holding Citigroup or generate 52.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Red Moon Resources
Performance |
| Timeline |
| Citigroup |
| Red Moon Resources |
Citigroup and Red Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Red Moon
The main advantage of trading using opposite Citigroup and Red Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Red Moon 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 Red Moon will offset losses from the drop in Red Moon's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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