Correlation Between Citigroup and Talisman Mining

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

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

Diversification Opportunities for Citigroup and Talisman Mining

0.0

Correlation Coefficient

Citigroup  Talisman Mining

Pay attention - limited upside

The 3 months correlation between Citigroup and Talisman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Talisman Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talisman Mining 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 Talisman Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talisman Mining has no effect on the direction of Citigroup i.e., Citigroup and Talisman Mining go up and down completely randomly.

Pair Corralation between Citigroup and Talisman Mining

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.79 times less return on investment than Talisman Mining. But when comparing it to its historical volatility, Citigroup is 3.41 times less risky than Talisman Mining. It trades about 0.07 of its potential returns per unit of risk. Talisman Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Talisman Mining on August 31, 2024 and sell it today you would earn a total of  5.00  from holding Talisman Mining or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.38%
Values	Daily Returns

Citigroup  vs.  Talisman Mining

Citigroup

Risk-Adjusted Performance

10 of 100

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.

Talisman Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talisman Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Talisman Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Talisman Mining

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

The idea behind Citigroup and Talisman Mining 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.