Correlation Between Citigroup and Santana Minerals

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

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

Diversification Opportunities for Citigroup and Santana Minerals

-0.9

Correlation Coefficient

Citigroup  Santana Minerals

Pay attention - limited upside

The 3 months correlation between Citigroup and Santana is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Santana Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santana Minerals 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 Santana Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santana Minerals has no effect on the direction of Citigroup i.e., Citigroup and Santana Minerals go up and down completely randomly.

Pair Corralation between Citigroup and Santana Minerals

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.78 times less return on investment than Santana Minerals. But when comparing it to its historical volatility, Citigroup is 2.9 times less risky than Santana Minerals. It trades about 0.11 of its potential returns per unit of risk. Santana Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Santana Minerals on September 23, 2024 and sell it today you would earn a total of  21.00  from holding Santana Minerals or generate 84.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.26%
Values	Daily Returns

Citigroup  vs.  Santana Minerals

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.

Santana Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santana Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and Santana Minerals

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

The idea behind Citigroup and Santana Minerals 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.