Correlation Between Citigroup and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Newmont Corp 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 Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Newmont Corp, you can compare the effects of market volatilities on Citigroup and Newmont Corp 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 Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Newmont Corp.
Diversification Opportunities for Citigroup and Newmont Corp
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Newmont is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Citigroup i.e., Citigroup and Newmont Corp go up and down completely randomly.
Pair Corralation between Citigroup and Newmont Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.84 times more return on investment than Newmont Corp. However, Citigroup is 1.19 times less risky than Newmont Corp. It trades about 0.07 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.02 per unit of risk. If you would invest 6,043 in Citigroup on September 25, 2024 and sell it today you would earn a total of 876.00 from holding Citigroup or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. Newmont Corp
Performance |
| Timeline |
| Citigroup |
| Newmont Corp |
Citigroup and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Newmont Corp
The main advantage of trading using opposite Citigroup and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.The idea behind Citigroup and Newmont 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.| Newmont Corp vs. Uniper SE | Newmont Corp vs. Mulberry Group PLC | Newmont Corp vs. London Security Plc | Newmont Corp vs. Triad Group PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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