Correlation Between Goldman Sachs and Citigroup
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Citigroup 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 Goldman Sachs and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Group and Citigroup, you can compare the effects of market volatilities on Goldman Sachs and Citigroup 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 Goldman Sachs with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Citigroup.
Diversification Opportunities for Goldman Sachs and Citigroup
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Citigroup is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Goldman Sachs 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 Goldman Sachs Group are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Citigroup go up and down completely randomly.
Pair Corralation between Goldman Sachs and Citigroup
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.88 times more return on investment than Citigroup. However, Goldman Sachs Group is 1.13 times less risky than Citigroup. It trades about 0.07 of its potential returns per unit of risk. Citigroup is currently generating about 0.06 per unit of risk. If you would invest 28,205 in Goldman Sachs Group on January 25, 2024 and sell it today you would earn a total of 14,099 from holding Goldman Sachs Group or generate 49.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Citigroup
Performance |
| Timeline |
| Goldman Sachs Group |
| Citigroup |
Goldman Sachs and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Citigroup
The main advantage of trading using opposite Goldman Sachs and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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