Correlation Between Citigroup and Tarku Resources

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

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

Diversification Opportunities for Citigroup and Tarku Resources

-0.19

Correlation Coefficient

Citigroup  Tarku Resources

Good diversification

The 3 months correlation between Citigroup and Tarku is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tarku Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarku Resources 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 Tarku Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarku Resources has no effect on the direction of Citigroup i.e., Citigroup and Tarku Resources go up and down completely randomly.

Pair Corralation between Citigroup and Tarku Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.51 times more return on investment than Tarku Resources. However, Citigroup is 1.96 times less risky than Tarku Resources. It trades about 0.21 of its potential returns per unit of risk. Tarku Resources is currently generating about -0.14 per unit of risk. If you would invest  6,946  in Citigroup on December 3, 2024 and sell it today you would earn a total of  1,049  from holding Citigroup or generate 15.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Tarku Resources

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.

Tarku Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tarku Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tarku Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Tarku Resources

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

The idea behind Citigroup and Tarku Resources 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.