Correlation Between Citigroup and Pantheon Resources

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

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

Diversification Opportunities for Citigroup and Pantheon Resources

0.22

Correlation Coefficient

Citigroup  Pantheon Resources

Modest diversification

The 3 months correlation between Citigroup and Pantheon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pantheon Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pantheon Resources Plc 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 Pantheon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pantheon Resources Plc has no effect on the direction of Citigroup i.e., Citigroup and Pantheon Resources go up and down completely randomly.

Pair Corralation between Citigroup and Pantheon Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 20.92 times less return on investment than Pantheon Resources. But when comparing it to its historical volatility, Citigroup is 2.84 times less risky than Pantheon Resources. It trades about 0.04 of its potential returns per unit of risk. Pantheon Resources Plc is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Pantheon Resources Plc on December 27, 2024 and sell it today you would earn a total of  55.00  from holding Pantheon Resources Plc or generate 157.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Pantheon Resources Plc

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pantheon Resources Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pantheon Resources Plc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pantheon Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Pantheon Resources

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

The idea behind Citigroup and Pantheon Resources Plc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.