Correlation Between Citigroup and Gold Ent

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

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

Diversification Opportunities for Citigroup and Gold Ent

0.02

Correlation Coefficient

Citigroup  Gold Ent

Significant diversification

The 3 months correlation between Citigroup and Gold is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Gold Ent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Ent Group 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 Gold Ent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Ent Group has no effect on the direction of Citigroup i.e., Citigroup and Gold Ent go up and down completely randomly.

Pair Corralation between Citigroup and Gold Ent

Taking into account the 90-day investment horizon Citigroup is expected to generate 15.68 times less return on investment than Gold Ent. But when comparing it to its historical volatility, Citigroup is 20.77 times less risky than Gold Ent. It trades about 0.21 of its potential returns per unit of risk. Gold Ent Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Gold Ent Group on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Gold Ent Group or generate 0.0% return on investment over 90 days.

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

Citigroup  vs.  Gold Ent Group

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Gold Ent Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Ent Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Gold Ent reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Gold Ent

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

The idea behind Citigroup and Gold Ent Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.