Correlation Between Citigroup and Beaver Coal

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

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

Diversification Opportunities for Citigroup and Beaver Coal

-0.59

Correlation Coefficient

Citigroup  Beaver Coal

Excellent diversification

The 3 months correlation between Citigroup and Beaver is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Beaver Coal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beaver Coal 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 Beaver Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beaver Coal has no effect on the direction of Citigroup i.e., Citigroup and Beaver Coal go up and down completely randomly.

Pair Corralation between Citigroup and Beaver Coal

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.5 times more return on investment than Beaver Coal. However, Citigroup is 2.0 times less risky than Beaver Coal. It trades about 0.11 of its potential returns per unit of risk. Beaver Coal Co is currently generating about -0.04 per unit of risk. If you would invest  9,208  in Citigroup on August 3, 2025 and sell it today you would earn a total of  915.00  from holding Citigroup or generate 9.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Beaver Coal Co

Citigroup

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Beaver Coal

Risk-Adjusted Performance

Weakest

Over the last 90 days Beaver Coal Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Citigroup and Beaver Coal

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

The idea behind Citigroup and Beaver Coal Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.