Correlation Between Citigroup and Golden House

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

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

Diversification Opportunities for Citigroup and Golden House

0.48

Correlation Coefficient

Citigroup  Golden House

Very weak diversification

The 3 months correlation between Citigroup and Golden is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Golden House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden House 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 Golden House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden House has no effect on the direction of Citigroup i.e., Citigroup and Golden House go up and down completely randomly.

Pair Corralation between Citigroup and Golden House

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.89 times less return on investment than Golden House. But when comparing it to its historical volatility, Citigroup is 2.76 times less risky than Golden House. It trades about 0.25 of its potential returns per unit of risk. Golden House is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  112,215  in Golden House on January 19, 2024 and sell it today you would earn a total of  94,885  from holding Golden House or generate 84.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.93%
Values	Daily Returns

Citigroup  vs.  Golden House

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Golden House

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden House are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golden House may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Citigroup and Golden House

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

The idea behind Citigroup and Golden House 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.