Correlation Between Citigroup and Carlin Gold

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

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

Diversification Opportunities for Citigroup and Carlin Gold

-0.36

Correlation Coefficient

Citigroup  Carlin Gold

Very good diversification

The 3 months correlation between Citigroup and Carlin is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Carlin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlin 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 Carlin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlin Gold has no effect on the direction of Citigroup i.e., Citigroup and Carlin Gold go up and down completely randomly.

Pair Corralation between Citigroup and Carlin Gold

Taking into account the 90-day investment horizon Citigroup is expected to generate 23.45 times less return on investment than Carlin Gold. But when comparing it to its historical volatility, Citigroup is 3.19 times less risky than Carlin Gold. It trades about 0.01 of its potential returns per unit of risk. Carlin Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Carlin Gold on December 28, 2024 and sell it today you would earn a total of  6.00  from holding Carlin Gold or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Carlin Gold

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Carlin Gold

Risk-Adjusted Performance

OK

Over the last 90 days Carlin Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Carlin Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Carlin Gold

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

The idea behind Citigroup and Carlin 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 Stocks Directory module to find actively traded stocks across global markets.