Correlation Between Citigroup and Techgen Metals
Can any of the company-specific risk be diversified away by investing in both Citigroup and Techgen 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 Techgen Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Techgen Metals, you can compare the effects of market volatilities on Citigroup and Techgen 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 Techgen Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Techgen Metals.
Diversification Opportunities for Citigroup and Techgen Metals
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Techgen is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Techgen Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techgen 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 Techgen Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techgen Metals has no effect on the direction of Citigroup i.e., Citigroup and Techgen Metals go up and down completely randomly.
Pair Corralation between Citigroup and Techgen Metals
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.93 times less return on investment than Techgen Metals. But when comparing it to its historical volatility, Citigroup is 5.39 times less risky than Techgen Metals. It trades about 0.06 of its potential returns per unit of risk. Techgen Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.20 in Techgen Metals on September 21, 2024 and sell it today you would earn a total of 0.10 from holding Techgen Metals or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Techgen Metals
Performance |
| Timeline |
| Citigroup |
| Techgen Metals |
Citigroup and Techgen Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Techgen Metals
The main advantage of trading using opposite Citigroup and Techgen Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Techgen 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 Techgen Metals will offset losses from the drop in Techgen Metals' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Techgen Metals vs. Northern Star Resources | Techgen Metals vs. Evolution Mining | Techgen Metals vs. Bluescope Steel | Techgen Metals vs. Sandfire Resources NL |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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