Correlation Between Citigroup and Tocqueville Gold

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

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

Diversification Opportunities for Citigroup and Tocqueville Gold

-0.22

Correlation Coefficient

Citigroup  Tocqueville Gold

Very good diversification

The 3 months correlation between Citigroup and Tocqueville is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Tocqueville Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tocqueville 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 Tocqueville Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tocqueville Gold has no effect on the direction of Citigroup i.e., Citigroup and Tocqueville Gold go up and down completely randomly.

Pair Corralation between Citigroup and Tocqueville Gold

If you would invest  5,788  in Citigroup on September 14, 2024 and sell it today you would earn a total of  1,408  from holding Citigroup or generate 24.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Citigroup  vs.  The Tocqueville Gold

Citigroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tocqueville Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Tocqueville Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Tocqueville Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Tocqueville Gold

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

The idea behind Citigroup and The Tocqueville 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.