Correlation Between Citigroup and Spey Resources

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

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

Diversification Opportunities for Citigroup and Spey Resources

0.77

Correlation Coefficient

Citigroup  Spey Resources

Poor diversification

The 3 months correlation between Citigroup and Spey is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Spey Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spey Resources 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 Spey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spey Resources Corp has no effect on the direction of Citigroup i.e., Citigroup and Spey Resources go up and down completely randomly.

Pair Corralation between Citigroup and Spey Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 7.36 times less return on investment than Spey Resources. But when comparing it to its historical volatility, Citigroup is 23.57 times less risky than Spey Resources. It trades about 0.23 of its potential returns per unit of risk. Spey Resources Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Spey Resources Corp on September 18, 2024 and sell it today you would lose (0.50) from holding Spey Resources Corp or give up 5.0% of portfolio value over 90 days.

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

Citigroup  vs.  Spey Resources Corp

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

Spey Resources Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spey Resources Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Spey Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Spey Resources

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

The idea behind Citigroup and Spey Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.