Correlation Between Citigroup and True North

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

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

Diversification Opportunities for Citigroup and True North

-0.35

Correlation Coefficient

Citigroup  True North

Very good diversification

The 3 months correlation between Citigroup and True is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and True North Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Copper 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 True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Copper has no effect on the direction of Citigroup i.e., Citigroup and True North go up and down completely randomly.

Pair Corralation between Citigroup and True North

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.5 times more return on investment than True North. However, Citigroup is 1.99 times less risky than True North. It trades about 0.06 of its potential returns per unit of risk. True North Copper is currently generating about -0.09 per unit of risk. If you would invest  6,227  in Citigroup on September 27, 2024 and sell it today you would earn a total of  873.00  from holding Citigroup or generate 14.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.66%
Values	Daily Returns

Citigroup  vs.  True North Copper

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.

True North Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days True North Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and True North

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

The idea behind Citigroup and True North Copper 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.