Correlation Between Citigroup and Patagonia Gold

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

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

Diversification Opportunities for Citigroup and Patagonia Gold

0.48

Correlation Coefficient

Citigroup  Patagonia Gold

Very weak diversification

The 3 months correlation between Citigroup and Patagonia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Patagonia Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patagonia 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 Patagonia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patagonia Gold Corp has no effect on the direction of Citigroup i.e., Citigroup and Patagonia Gold go up and down completely randomly.

Pair Corralation between Citigroup and Patagonia Gold

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.08 times less return on investment than Patagonia Gold. But when comparing it to its historical volatility, Citigroup is 7.08 times less risky than Patagonia Gold. It trades about 0.1 of its potential returns per unit of risk. Patagonia Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Patagonia Gold Corp on September 23, 2024 and sell it today you would lose (1.00) from holding Patagonia Gold Corp or give up 25.0% of portfolio value over 90 days.

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

Citigroup  vs.  Patagonia Gold Corp

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Patagonia Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patagonia Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Patagonia Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Patagonia Gold

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

The idea behind Citigroup and Patagonia 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.