Correlation Between Citigroup and Silver Tiger

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

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

Diversification Opportunities for Citigroup and Silver Tiger

0.86

Correlation Coefficient

Citigroup  Silver Tiger

Very poor diversification

The 3 months correlation between Citigroup and Silver is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Silver Tiger Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Tiger 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 Silver Tiger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Tiger Metals has no effect on the direction of Citigroup i.e., Citigroup and Silver Tiger go up and down completely randomly.

Pair Corralation between Citigroup and Silver Tiger

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.12 times less return on investment than Silver Tiger. But when comparing it to its historical volatility, Citigroup is 3.33 times less risky than Silver Tiger. It trades about 0.13 of its potential returns per unit of risk. Silver Tiger Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Silver Tiger Metals on November 29, 2024 and sell it today you would earn a total of  6.00  from holding Silver Tiger Metals or generate 35.29% return on investment over 90 days.

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

Citigroup  vs.  Silver Tiger Metals

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Silver Tiger Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Tiger Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Tiger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Silver Tiger

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

The idea behind Citigroup and Silver Tiger 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.