Correlation Between Citigroup and GoldMining

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

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

Diversification Opportunities for Citigroup and GoldMining

0.72

Correlation Coefficient

Citigroup  GoldMining

Poor diversification

The 3 months correlation between Citigroup and GoldMining is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Citigroup i.e., Citigroup and GoldMining go up and down completely randomly.

Pair Corralation between Citigroup and GoldMining

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.54 times less return on investment than GoldMining. But when comparing it to its historical volatility, Citigroup is 2.2 times less risky than GoldMining. It trades about 0.22 of its potential returns per unit of risk. GoldMining is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  100.00  in GoldMining on July 1, 2025 and sell it today you would earn a total of  70.00  from holding GoldMining or generate 70.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.95%
Values	Daily Returns

Citigroup  vs.  GoldMining

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

GoldMining

Risk-Adjusted Performance

Strong

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, GoldMining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and GoldMining

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

The idea behind Citigroup and GoldMining 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.