Correlation Between Citigroup and Norden Crown

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

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

Diversification Opportunities for Citigroup and Norden Crown

0.24

Correlation Coefficient

Citigroup  Norden Crown

Modest diversification

The 3 months correlation between Citigroup and Norden is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Norden Crown Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norden Crown 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 Norden Crown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norden Crown Metals has no effect on the direction of Citigroup i.e., Citigroup and Norden Crown go up and down completely randomly.

Pair Corralation between Citigroup and Norden Crown

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.14 times more return on investment than Norden Crown. However, Citigroup is 7.25 times less risky than Norden Crown. It trades about -0.04 of its potential returns per unit of risk. Norden Crown Metals is currently generating about -0.24 per unit of risk. If you would invest  7,186  in Citigroup on October 8, 2024 and sell it today you would lose (86.00) from holding Citigroup or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

Citigroup  vs.  Norden Crown Metals

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Norden Crown Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Citigroup and Norden Crown

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

The idea behind Citigroup and Norden Crown 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.