Correlation Between Citigroup and Northern Lion

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

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

Diversification Opportunities for Citigroup and Northern Lion

0.0

Correlation Coefficient

Citigroup  Northern Lion

Pay attention - limited upside

The 3 months correlation between Citigroup and Northern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Northern Lion Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lion Gold 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 Northern Lion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lion Gold has no effect on the direction of Citigroup i.e., Citigroup and Northern Lion go up and down completely randomly.

Pair Corralation between Citigroup and Northern Lion

If you would invest  6,205  in Citigroup on September 29, 2024 and sell it today you would earn a total of  895.00  from holding Citigroup or generate 14.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Northern Lion Gold

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.

Northern Lion Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Lion Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Northern Lion is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Northern Lion

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

The idea behind Citigroup and Northern Lion Gold 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.