Correlation Between Citigroup and BeMetals Corp

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

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

Diversification Opportunities for Citigroup and BeMetals Corp

-0.76

Correlation Coefficient

Citigroup  BeMetals Corp

Pay attention - limited upside

The 3 months correlation between Citigroup and BeMetals is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BeMetals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeMetals Corp 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 BeMetals Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeMetals Corp has no effect on the direction of Citigroup i.e., Citigroup and BeMetals Corp go up and down completely randomly.

Pair Corralation between Citigroup and BeMetals Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.27 times more return on investment than BeMetals Corp. However, Citigroup is 3.65 times less risky than BeMetals Corp. It trades about 0.07 of its potential returns per unit of risk. BeMetals Corp is currently generating about 0.0 per unit of risk. If you would invest  4,328  in Citigroup on September 25, 2024 and sell it today you would earn a total of  2,591  from holding Citigroup or generate 59.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  BeMetals Corp

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.

BeMetals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BeMetals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Citigroup and BeMetals Corp

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

The idea behind Citigroup and BeMetals Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.