Correlation Between Citigroup and Eagle Plains

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

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

Diversification Opportunities for Citigroup and Eagle Plains

0.05

Correlation Coefficient

Citigroup  Eagle Plains

Significant diversification

The 3 months correlation between Citigroup and Eagle is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Eagle Plains Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Plains 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 Eagle Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Plains Resources has no effect on the direction of Citigroup i.e., Citigroup and Eagle Plains go up and down completely randomly.

Pair Corralation between Citigroup and Eagle Plains

Taking into account the 90-day investment horizon Citigroup is expected to generate 52.75 times less return on investment than Eagle Plains. But when comparing it to its historical volatility, Citigroup is 6.87 times less risky than Eagle Plains. It trades about 0.01 of its potential returns per unit of risk. Eagle Plains Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Eagle Plains Resources on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Eagle Plains Resources or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  Eagle Plains Resources

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eagle Plains Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Plains Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Eagle Plains reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Eagle Plains

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

The idea behind Citigroup and Eagle Plains 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.