Correlation Between Citigroup and Q2 Metals

Can any of the company-specific risk be diversified away by investing in both Citigroup and Q2 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 Q2 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Q2 Metals Corp, you can compare the effects of market volatilities on Citigroup and Q2 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 Q2 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Q2 Metals.

Diversification Opportunities for Citigroup and Q2 Metals

-0.26

Correlation Coefficient

Citigroup  Q2 Metals

Very good diversification

The 3 months correlation between Citigroup and QTWO is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Q2 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Metals Corp 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 Q2 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Metals Corp has no effect on the direction of Citigroup i.e., Citigroup and Q2 Metals go up and down completely randomly.

Pair Corralation between Citigroup and Q2 Metals

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.09 times less return on investment than Q2 Metals. But when comparing it to its historical volatility, Citigroup is 5.18 times less risky than Q2 Metals. It trades about 0.07 of its potential returns per unit of risk. Q2 Metals Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Q2 Metals Corp on September 22, 2024 and sell it today you would earn a total of  38.00  from holding Q2 Metals Corp or generate 95.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  Q2 Metals Corp

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Q2 Metals Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Metals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Q2 Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Q2 Metals

The main advantage of trading using opposite Citigroup and Q2 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Q2 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 Q2 Metals will offset losses from the drop in Q2 Metals' long position.

The idea behind Citigroup and Q2 Metals Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.