Correlation Between Citigroup and Copper Road

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

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

Diversification Opportunities for Citigroup and Copper Road

0.07

Correlation Coefficient

Citigroup  Copper Road

Significant diversification

The 3 months correlation between Citigroup and Copper is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Copper Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Road Resources 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 Copper Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Road Resources has no effect on the direction of Citigroup i.e., Citigroup and Copper Road go up and down completely randomly.

Pair Corralation between Citigroup and Copper Road

Taking into account the 90-day investment horizon Citigroup is expected to generate 24.59 times less return on investment than Copper Road. But when comparing it to its historical volatility, Citigroup is 8.86 times less risky than Copper Road. It trades about 0.04 of its potential returns per unit of risk. Copper Road Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Copper Road Resources on December 21, 2024 and sell it today you would earn a total of  0.50  from holding Copper Road Resources or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Citigroup  vs.  Copper Road Resources

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Copper Road Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copper Road Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Copper Road showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Copper Road

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

The idea behind Citigroup and Copper Road Resources 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.