Correlation Between Citigroup and CI Gold

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

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

Diversification Opportunities for Citigroup and CI Gold

0.44

Correlation Coefficient

Citigroup  CI Gold

Very weak diversification

The 3 months correlation between Citigroup and VALT-B is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CI Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Bullion 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 CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Bullion has no effect on the direction of Citigroup i.e., Citigroup and CI Gold go up and down completely randomly.

Pair Corralation between Citigroup and CI Gold

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the CI Gold. In addition to that, Citigroup is 1.04 times more volatile than CI Gold Bullion. It trades about -0.04 of its total potential returns per unit of risk. CI Gold Bullion is currently generating about 0.1 per unit of volatility. If you would invest  3,629  in CI Gold Bullion on September 19, 2024 and sell it today you would earn a total of  92.00  from holding CI Gold Bullion or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Citigroup  vs.  CI Gold Bullion

Citigroup

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI Gold Bullion

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Bullion are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak essential indicators, CI Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and CI Gold

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

The idea behind Citigroup and CI Gold Bullion 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.