Correlation Between Citigroup and IAMGold
Can any of the company-specific risk be diversified away by investing in both Citigroup and IAMGold 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 IAMGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and IAMGold, you can compare the effects of market volatilities on Citigroup and IAMGold 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 IAMGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IAMGold.
Diversification Opportunities for Citigroup and IAMGold
Modest diversification
The 3 months correlation between Citigroup and IAMGold is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold 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 IAMGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAMGold has no effect on the direction of Citigroup i.e., Citigroup and IAMGold go up and down completely randomly.
Pair Corralation between Citigroup and IAMGold
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.29 times less return on investment than IAMGold. But when comparing it to its historical volatility, Citigroup is 2.09 times less risky than IAMGold. It trades about 0.07 of its potential returns per unit of risk. IAMGold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 286.00 in IAMGold on August 24, 2024 and sell it today you would earn a total of 513.00 from holding IAMGold or generate 179.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Citigroup vs. IAMGold
Performance |
| Timeline |
| Citigroup |
| IAMGold |
Citigroup and IAMGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IAMGold
The main advantage of trading using opposite Citigroup and IAMGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IAMGold 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 IAMGold will offset losses from the drop in IAMGold's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| IAMGold vs. Eldorado Gold Corp | IAMGold vs. Kinross Gold Corp | IAMGold vs. Alamos Gold | IAMGold vs. New Gold |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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