Correlation Between Citigroup and SolGold PLC

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

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

Diversification Opportunities for Citigroup and SolGold PLC

-0.88

Correlation Coefficient

Citigroup  SolGold PLC

Pay attention - limited upside

The 3 months correlation between Citigroup and SolGold is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SolGold PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolGold PLC 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 SolGold PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolGold PLC has no effect on the direction of Citigroup i.e., Citigroup and SolGold PLC go up and down completely randomly.

Pair Corralation between Citigroup and SolGold PLC

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.59 times more return on investment than SolGold PLC. However, Citigroup is 1.7 times less risky than SolGold PLC. It trades about 0.1 of its potential returns per unit of risk. SolGold PLC is currently generating about -0.23 per unit of risk. If you would invest  6,203  in Citigroup on September 23, 2024 and sell it today you would earn a total of  716.00  from holding Citigroup or generate 11.54% return on investment over 90 days.

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

Citigroup  vs.  SolGold PLC

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.

SolGold PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolGold PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Citigroup and SolGold PLC

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

The idea behind Citigroup and SolGold PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.