Correlation Between Citigroup and Western Copper

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

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

Diversification Opportunities for Citigroup and Western Copper

0.03

Correlation Coefficient

Citigroup  Western Copper

Significant diversification

The 3 months correlation between Citigroup and Western is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Citigroup i.e., Citigroup and Western Copper go up and down completely randomly.

Pair Corralation between Citigroup and Western Copper

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.75 times less return on investment than Western Copper. But when comparing it to its historical volatility, Citigroup is 1.44 times less risky than Western Copper. It trades about 0.04 of its potential returns per unit of risk. Western Copper and is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Western Copper and on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Western Copper and or generate 11.88% return on investment over 90 days.

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

Citigroup  vs.  Western Copper and

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Western Copper

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Copper and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Western Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Western Copper

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

The idea behind Citigroup and Western Copper and 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.