Correlation Between Citigroup and Chibougamau Independent

Can any of the company-specific risk be diversified away by investing in both Citigroup and Chibougamau Independent 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 Chibougamau Independent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Chibougamau Independent Mines, you can compare the effects of market volatilities on Citigroup and Chibougamau Independent 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 Chibougamau Independent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Chibougamau Independent.

Diversification Opportunities for Citigroup and Chibougamau Independent

0.62

Correlation Coefficient

Citigroup  Chibougamau Independent

Poor diversification

The 3 months correlation between Citigroup and Chibougamau is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Chibougamau Independent Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chibougamau Independent 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 Chibougamau Independent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chibougamau Independent has no effect on the direction of Citigroup i.e., Citigroup and Chibougamau Independent go up and down completely randomly.

Pair Corralation between Citigroup and Chibougamau Independent

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.03 times less return on investment than Chibougamau Independent. But when comparing it to its historical volatility, Citigroup is 2.57 times less risky than Chibougamau Independent. It trades about 0.06 of its potential returns per unit of risk. Chibougamau Independent Mines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Chibougamau Independent Mines on September 29, 2024 and sell it today you would earn a total of  2.00  from holding Chibougamau Independent Mines or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  Chibougamau Independent Mines

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chibougamau Independent

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chibougamau Independent Mines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chibougamau Independent showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Chibougamau Independent

The main advantage of trading using opposite Citigroup and Chibougamau Independent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Chibougamau Independent 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 Chibougamau Independent will offset losses from the drop in Chibougamau Independent's long position.

The idea behind Citigroup and Chibougamau Independent Mines 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.