Correlation Between Citigroup and SKRR Exploration

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

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

Diversification Opportunities for Citigroup and SKRR Exploration

-0.58

Correlation Coefficient

Citigroup  SKRR Exploration

Excellent diversification

The 3 months correlation between Citigroup and SKRR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SKRR Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKRR Exploration 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 SKRR Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKRR Exploration has no effect on the direction of Citigroup i.e., Citigroup and SKRR Exploration go up and down completely randomly.

Pair Corralation between Citigroup and SKRR Exploration

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.19 times more return on investment than SKRR Exploration. However, Citigroup is 5.4 times less risky than SKRR Exploration. It trades about 0.12 of its potential returns per unit of risk. SKRR Exploration is currently generating about 0.02 per unit of risk. If you would invest  6,247  in Citigroup on September 19, 2024 and sell it today you would earn a total of  865.00  from holding Citigroup or generate 13.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  SKRR Exploration

Citigroup

Risk-Adjusted Performance

9 of 100

Good

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

SKRR Exploration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SKRR Exploration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SKRR Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and SKRR Exploration

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

The idea behind Citigroup and SKRR Exploration 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.