Correlation Between Citigroup and Tamar Petroleum
Can any of the company-specific risk be diversified away by investing in both Citigroup and Tamar Petroleum 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 Tamar Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Tamar Petroleum, you can compare the effects of market volatilities on Citigroup and Tamar Petroleum 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 Tamar Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tamar Petroleum.
Diversification Opportunities for Citigroup and Tamar Petroleum
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Tamar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tamar Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamar Petroleum 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 Tamar Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamar Petroleum has no effect on the direction of Citigroup i.e., Citigroup and Tamar Petroleum go up and down completely randomly.
Pair Corralation between Citigroup and Tamar Petroleum
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.58 times less return on investment than Tamar Petroleum. In addition to that, Citigroup is 1.12 times more volatile than Tamar Petroleum. It trades about 0.21 of its total potential returns per unit of risk. Tamar Petroleum is currently generating about 0.38 per unit of volatility. If you would invest 216,000 in Tamar Petroleum on August 28, 2024 and sell it today you would earn a total of 28,000 from holding Tamar Petroleum or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Citigroup vs. Tamar Petroleum
Performance |
| Timeline |
| Citigroup |
| Tamar Petroleum |
Citigroup and Tamar Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Tamar Petroleum
The main advantage of trading using opposite Citigroup and Tamar Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Tamar Petroleum 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 Tamar Petroleum will offset losses from the drop in Tamar Petroleum's long position.The idea behind Citigroup and Tamar Petroleum pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tamar Petroleum vs. Atreyu Capital Markets | Tamar Petroleum vs. IBI Inv House | Tamar Petroleum vs. Delek Automotive Systems | Tamar Petroleum vs. Scope Metals Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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