Correlation Between Citigroup and Wescan Goldfields
Can any of the company-specific risk be diversified away by investing in both Citigroup and Wescan Goldfields 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 Wescan Goldfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Wescan Goldfields, you can compare the effects of market volatilities on Citigroup and Wescan Goldfields 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 Wescan Goldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Wescan Goldfields.
Diversification Opportunities for Citigroup and Wescan Goldfields
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Wescan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wescan Goldfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wescan Goldfields 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 Wescan Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wescan Goldfields has no effect on the direction of Citigroup i.e., Citigroup and Wescan Goldfields go up and down completely randomly.
Pair Corralation between Citigroup and Wescan Goldfields
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Wescan Goldfields. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 6.62 times less risky than Wescan Goldfields. The stock trades about -0.2 of its potential returns per unit of risk. The Wescan Goldfields is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Wescan Goldfields on December 5, 2024 and sell it today you would earn a total of 2.00 from holding Wescan Goldfields or generate 66.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Wescan Goldfields
Performance |
Timeline |
Citigroup |
Wescan Goldfields |
Citigroup and Wescan Goldfields Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Wescan Goldfields
The main advantage of trading using opposite Citigroup and Wescan Goldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Wescan Goldfields 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 Wescan Goldfields will offset losses from the drop in Wescan Goldfields' long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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