Correlation Between Citigroup and Gold Road

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

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

Diversification Opportunities for Citigroup and Gold Road

0.66

Correlation Coefficient

Citigroup  Gold Road

Poor diversification

The 3 months correlation between Citigroup and Gold is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Citigroup i.e., Citigroup and Gold Road go up and down completely randomly.

Pair Corralation between Citigroup and Gold Road

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times less return on investment than Gold Road. But when comparing it to its historical volatility, Citigroup is 1.12 times less risky than Gold Road. It trades about 0.18 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Gold Road Resources on September 14, 2024 and sell it today you would earn a total of  53.00  from holding Gold Road Resources or generate 32.52% return on investment over 90 days.

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

Citigroup  vs.  Gold Road Resources

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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 Road Resources

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gold Road unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Gold Road

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

The idea behind Citigroup and Gold Road Resources 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.