Correlation Between Citigroup and Russel Metals
Can any of the company-specific risk be diversified away by investing in both Citigroup and Russel 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 Russel Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Russel Metals, you can compare the effects of market volatilities on Citigroup and Russel 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 Russel Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Russel Metals.
Diversification Opportunities for Citigroup and Russel Metals
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Russel is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Russel Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russel 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 Russel Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russel Metals has no effect on the direction of Citigroup i.e., Citigroup and Russel Metals go up and down completely randomly.
Pair Corralation between Citigroup and Russel Metals
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.3 times less return on investment than Russel Metals. In addition to that, Citigroup is 1.26 times more volatile than Russel Metals. It trades about 0.11 of its total potential returns per unit of risk. Russel Metals is currently generating about 0.18 per unit of volatility. If you would invest 3,766 in Russel Metals on August 29, 2024 and sell it today you would earn a total of 710.00 from holding Russel Metals or generate 18.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Citigroup vs. Russel Metals
Performance |
| Timeline |
| Citigroup |
| Russel Metals |
Citigroup and Russel Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Russel Metals
The main advantage of trading using opposite Citigroup and Russel Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Russel 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 Russel Metals will offset losses from the drop in Russel Metals' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Russel Metals vs. Finning International | Russel Metals vs. Transcontinental | Russel Metals vs. Toromont Industries | Russel Metals vs. IGM Financial |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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