Correlation Between Citigroup and Capella Minerals

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

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

Diversification Opportunities for Citigroup and Capella Minerals

-0.15

Correlation Coefficient

Citigroup  Capella Minerals

Good diversification

The 3 months correlation between Citigroup and Capella is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Capella Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capella Minerals 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 Capella Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capella Minerals has no effect on the direction of Citigroup i.e., Citigroup and Capella Minerals go up and down completely randomly.

Pair Corralation between Citigroup and Capella Minerals

Taking into account the 90-day investment horizon Citigroup is expected to generate 38.34 times less return on investment than Capella Minerals. But when comparing it to its historical volatility, Citigroup is 45.83 times less risky than Capella Minerals. It trades about 0.16 of its potential returns per unit of risk. Capella Minerals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Capella Minerals on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Capella Minerals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.35%
Values	Daily Returns

Citigroup  vs.  Capella Minerals

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Capella Minerals

Risk-Adjusted Performance

10 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capella Minerals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Capella Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Capella Minerals

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

The idea behind Citigroup and Capella Minerals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.