Correlation Between Citigroup and Goodheart Willcox

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

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

Diversification Opportunities for Citigroup and Goodheart Willcox

-0.6

Correlation Coefficient

Citigroup  Goodheart Willcox

Excellent diversification

The 3 months correlation between Citigroup and Goodheart is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Goodheart Willcox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodheart Willcox 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 Goodheart Willcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodheart Willcox has no effect on the direction of Citigroup i.e., Citigroup and Goodheart Willcox go up and down completely randomly.

Pair Corralation between Citigroup and Goodheart Willcox

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Goodheart Willcox. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 3.35 times less risky than Goodheart Willcox. The stock trades about -0.09 of its potential returns per unit of risk. The The Goodheart Willcox is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  40,000  in The Goodheart Willcox on September 25, 2024 and sell it today you would earn a total of  3,500  from holding The Goodheart Willcox or generate 8.75% return on investment over 90 days.

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

Citigroup  vs.  The Goodheart Willcox

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Goodheart Willcox

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Goodheart Willcox are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Goodheart Willcox is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Goodheart Willcox

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

The idea behind Citigroup and The Goodheart Willcox 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.