Correlation Between Citigroup and Fjordland Exploration

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

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

Diversification Opportunities for Citigroup and Fjordland Exploration

-0.72

Correlation Coefficient

Citigroup  Fjordland Exploration

Pay attention - limited upside

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

Pair Corralation between Citigroup and Fjordland Exploration

If you would invest  6,543  in Citigroup on October 13, 2024 and sell it today you would earn a total of  597.00  from holding Citigroup or generate 9.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Fjordland Exploration

Citigroup

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fjordland Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fjordland Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fjordland Exploration is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Fjordland Exploration

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

The idea behind Citigroup and Fjordland Exploration 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.