Correlation Between Citigroup and ETFS Metal

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

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

Diversification Opportunities for Citigroup and ETFS Metal

0.0

Correlation Coefficient

Citigroup  ETFS Metal

Pay attention - limited upside

The 3 months correlation between Citigroup and ETFS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ETFS Metal Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Metal Securities 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 ETFS Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Metal Securities has no effect on the direction of Citigroup i.e., Citigroup and ETFS Metal go up and down completely randomly.

Pair Corralation between Citigroup and ETFS Metal

If you would invest  5,937  in Citigroup on September 18, 2024 and sell it today you would earn a total of  1,212  from holding Citigroup or generate 20.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  ETFS Metal Securities

Citigroup

Risk-Adjusted Performance

12 of 100

Good

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

ETFS Metal Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETFS Metal Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, ETFS Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and ETFS Metal

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

The idea behind Citigroup and ETFS Metal Securities 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.