Correlation Between Citigroup and VANADIUMCORP RES

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

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

Diversification Opportunities for Citigroup and VANADIUMCORP RES

-0.17

Correlation Coefficient

Citigroup  VANADIUMCORP RES

Good diversification

The 3 months correlation between Citigroup and VANADIUMCORP is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VANADIUMCORP RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VANADIUMCORP RES 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 VANADIUMCORP RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VANADIUMCORP RES has no effect on the direction of Citigroup i.e., Citigroup and VANADIUMCORP RES go up and down completely randomly.

Pair Corralation between Citigroup and VANADIUMCORP RES

Taking into account the 90-day investment horizon Citigroup is expected to generate 13.52 times less return on investment than VANADIUMCORP RES. But when comparing it to its historical volatility, Citigroup is 11.67 times less risky than VANADIUMCORP RES. It trades about 0.06 of its potential returns per unit of risk. VANADIUMCORP RES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  85.00  in VANADIUMCORP RES on September 19, 2024 and sell it today you would lose (75.60) from holding VANADIUMCORP RES or give up 88.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.55%
Values	Daily Returns

Citigroup  vs.  VANADIUMCORP RES

Citigroup

Risk-Adjusted Performance

9 of 100

Good

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.

VANADIUMCORP RES

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VANADIUMCORP RES are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VANADIUMCORP RES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and VANADIUMCORP RES

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

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