Correlation Between Citigroup and ZincX Resources

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

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

Diversification Opportunities for Citigroup and ZincX Resources

0.57

Correlation Coefficient

Citigroup  ZincX Resources

Very weak diversification

The 3 months correlation between Citigroup and ZincX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ZincX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZincX 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 ZincX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZincX Resources Corp has no effect on the direction of Citigroup i.e., Citigroup and ZincX Resources go up and down completely randomly.

Pair Corralation between Citigroup and ZincX Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.13 times less return on investment than ZincX Resources. But when comparing it to its historical volatility, Citigroup is 1.79 times less risky than ZincX Resources. It trades about 0.04 of its potential returns per unit of risk. ZincX Resources Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8.00  in ZincX Resources Corp on December 22, 2024 and sell it today you would earn a total of  1.50  from holding ZincX Resources Corp or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  ZincX Resources Corp

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.

ZincX Resources Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZincX Resources Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ZincX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and ZincX Resources

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

The idea behind Citigroup and ZincX 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.