Correlation Between Citigroup and VanEck Gold

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

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

Diversification Opportunities for Citigroup and VanEck Gold

-0.18

Correlation Coefficient

Citigroup  VanEck Gold

Good diversification

The 3 months correlation between Citigroup and VanEck is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VanEck Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Gold Miners 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 VanEck Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Gold Miners has no effect on the direction of Citigroup i.e., Citigroup and VanEck Gold go up and down completely randomly.

Pair Corralation between Citigroup and VanEck Gold

Taking into account the 90-day investment horizon Citigroup is expected to generate 17.02 times less return on investment than VanEck Gold. In addition to that, Citigroup is 1.16 times more volatile than VanEck Gold Miners. It trades about 0.01 of its total potential returns per unit of risk. VanEck Gold Miners is currently generating about 0.29 per unit of volatility. If you would invest  3,377  in VanEck Gold Miners on December 28, 2024 and sell it today you would earn a total of  1,180  from holding VanEck Gold Miners or generate 34.94% return on investment over 90 days.

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

Citigroup  vs.  VanEck Gold Miners

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.

VanEck Gold Miners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Gold Miners are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish fundamental indicators, VanEck Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and VanEck Gold

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

The idea behind Citigroup and VanEck Gold Miners 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.