Correlation Between Citigroup and Petra Diamonds
Can any of the company-specific risk be diversified away by investing in both Citigroup and Petra Diamonds 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 Petra Diamonds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Petra Diamonds Limited, you can compare the effects of market volatilities on Citigroup and Petra Diamonds 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 Petra Diamonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Petra Diamonds.
Diversification Opportunities for Citigroup and Petra Diamonds
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Petra is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Petra Diamonds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petra Diamonds 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 Petra Diamonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petra Diamonds has no effect on the direction of Citigroup i.e., Citigroup and Petra Diamonds go up and down completely randomly.
Pair Corralation between Citigroup and Petra Diamonds
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.59 times less return on investment than Petra Diamonds. But when comparing it to its historical volatility, Citigroup is 1.62 times less risky than Petra Diamonds. It trades about 0.03 of its potential returns per unit of risk. Petra Diamonds Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Petra Diamonds Limited on December 27, 2024 and sell it today you would earn a total of 3.00 from holding Petra Diamonds Limited or generate 8.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.31% |
Values | Daily Returns |
Citigroup vs. Petra Diamonds Limited
Performance |
Timeline |
Citigroup |
Petra Diamonds |
Citigroup and Petra Diamonds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Petra Diamonds
The main advantage of trading using opposite Citigroup and Petra Diamonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Petra Diamonds 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 Petra Diamonds will offset losses from the drop in Petra Diamonds' long position.Citigroup vs. PJT Partners | Citigroup vs. National Bank Holdings | Citigroup vs. FB Financial Corp | Citigroup vs. Northrim BanCorp |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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