Correlation Between Citigroup and Radius Gold

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

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

Diversification Opportunities for Citigroup and Radius Gold

-0.21

Correlation Coefficient

Citigroup  Radius Gold

Very good diversification

The 3 months correlation between Citigroup and Radius is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Radius Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radius Gold 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 Radius Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radius Gold has no effect on the direction of Citigroup i.e., Citigroup and Radius Gold go up and down completely randomly.

Pair Corralation between Citigroup and Radius Gold

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Radius Gold. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 6.83 times less risky than Radius Gold. The stock trades about -0.03 of its potential returns per unit of risk. The Radius Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Radius Gold on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Radius Gold or generate 0.0% return on investment over 90 days.

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

Citigroup  vs.  Radius Gold

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 unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Radius Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radius Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Radius Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Radius Gold

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

The idea behind Citigroup and Radius Gold 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.