Correlation Between Citigroup and Hinterland Metals

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

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

Diversification Opportunities for Citigroup and Hinterland Metals

0.0

Correlation Coefficient

Citigroup  Hinterland Metals

Pay attention - limited upside

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

Pair Corralation between Citigroup and Hinterland Metals

If you would invest  6,122  in Citigroup on October 25, 2024 and sell it today you would earn a total of  2,047  from holding Citigroup or generate 33.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Hinterland Metals

Citigroup

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

Hinterland Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hinterland Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Hinterland Metals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Hinterland Metals

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

The idea behind Citigroup and Hinterland Metals 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.