Correlation Between Citigroup and Viva Gold

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

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

Diversification Opportunities for Citigroup and Viva Gold

0.44

Correlation Coefficient

Citigroup  Viva Gold

Very weak diversification

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

Pair Corralation between Citigroup and Viva Gold

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.39 times less return on investment than Viva Gold. But when comparing it to its historical volatility, Citigroup is 3.88 times less risky than Viva Gold. It trades about 0.04 of its potential returns per unit of risk. Viva Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9.90  in Viva Gold Corp on December 19, 2024 and sell it today you would lose (0.15) from holding Viva Gold Corp or give up 1.52% of portfolio value over 90 days.

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

Citigroup  vs.  Viva Gold Corp

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Viva Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Viva Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Viva Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Viva Gold

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

The idea behind Citigroup and Viva Gold Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.