Correlation Between Citigroup and Teck Resources
Can any of the company-specific risk be diversified away by investing in both Citigroup and Teck 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 Teck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Teck Resources Ltd, you can compare the effects of market volatilities on Citigroup and Teck 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 Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Teck Resources.
Diversification Opportunities for Citigroup and Teck Resources
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Teck is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Teck Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of Citigroup i.e., Citigroup and Teck Resources go up and down completely randomly.
Pair Corralation between Citigroup and Teck Resources
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.77 times more return on investment than Teck Resources. However, Citigroup is 1.29 times less risky than Teck Resources. It trades about 0.11 of its potential returns per unit of risk. Teck Resources Ltd is currently generating about 0.03 per unit of risk. If you would invest 5,135 in Citigroup on October 20, 2024 and sell it today you would earn a total of 2,864 from holding Citigroup or generate 55.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Teck Resources Ltd
Performance |
| Timeline |
| Citigroup |
| Teck Resources |
Citigroup and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Teck Resources
The main advantage of trading using opposite Citigroup and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Teck 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 Teck Resources will offset losses from the drop in Teck Resources' long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| Teck Resources vs. Rio Tinto ADR | Teck Resources vs. Vale SA ADR | Teck Resources vs. MP Materials Corp | Teck Resources vs. Lithium Americas 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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