Correlation Between Citigroup and GGX Gold

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

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

Diversification Opportunities for Citigroup and GGX Gold

-0.64

Correlation Coefficient

Citigroup  GGX Gold

Excellent diversification

The 3 months correlation between Citigroup and GGX is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and GGX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGX Gold 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 GGX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGX Gold Corp has no effect on the direction of Citigroup i.e., Citigroup and GGX Gold go up and down completely randomly.

Pair Corralation between Citigroup and GGX Gold

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.63 times less return on investment than GGX Gold. But when comparing it to its historical volatility, Citigroup is 10.56 times less risky than GGX Gold. It trades about 0.12 of its potential returns per unit of risk. GGX Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3.70  in GGX Gold Corp on September 12, 2024 and sell it today you would lose (2.29) from holding GGX Gold Corp or give up 61.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

Citigroup  vs.  GGX Gold Corp

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.

GGX Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GGX Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citigroup and GGX Gold

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

The idea behind Citigroup and GGX Gold 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.