Correlation Between Citigroup and Capitan Mining

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

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

Diversification Opportunities for Citigroup and Capitan Mining

0.72

Correlation Coefficient

Citigroup  Capitan Mining

Poor diversification

The 3 months correlation between Citigroup and Capitan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Capitan Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitan Mining 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 Capitan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitan Mining has no effect on the direction of Citigroup i.e., Citigroup and Capitan Mining go up and down completely randomly.

Pair Corralation between Citigroup and Capitan Mining

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.01 times less return on investment than Capitan Mining. But when comparing it to its historical volatility, Citigroup is 4.02 times less risky than Capitan Mining. It trades about 0.08 of its potential returns per unit of risk. Capitan Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Capitan Mining on September 30, 2024 and sell it today you would earn a total of  11.00  from holding Capitan Mining or generate 68.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Capitan Mining

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.

Capitan Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Capitan Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Capitan Mining

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

The idea behind Citigroup and Capitan Mining 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.