Correlation Between Citigroup and World Precious

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

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

Diversification Opportunities for Citigroup and World Precious

0.85

Correlation Coefficient

Citigroup  World Precious

Very poor diversification

The 3 months correlation between Citigroup and World is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and World Precious Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Precious Minerals 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 World Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Precious Minerals has no effect on the direction of Citigroup i.e., Citigroup and World Precious go up and down completely randomly.

Pair Corralation between Citigroup and World Precious

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.04 times more return on investment than World Precious. However, Citigroup is 1.04 times more volatile than World Precious Minerals. It trades about 0.13 of its potential returns per unit of risk. World Precious Minerals is currently generating about 0.11 per unit of risk. If you would invest  7,090  in Citigroup on December 1, 2024 and sell it today you would earn a total of  905.00  from holding Citigroup or generate 12.76% return on investment over 90 days.

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

Citigroup  vs.  World Precious Minerals

Citigroup

Risk-Adjusted Performance

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

World Precious Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in World Precious Minerals are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, World Precious may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and World Precious

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

The idea behind Citigroup and World Precious Minerals 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.