Correlation Between Citigroup and Microsectors Gold
Can any of the company-specific risk be diversified away by investing in both Citigroup and Microsectors Gold 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 Microsectors Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Microsectors Gold 3x, you can compare the effects of market volatilities on Citigroup and Microsectors Gold 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 Microsectors Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Microsectors Gold.
Diversification Opportunities for Citigroup and Microsectors Gold
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Microsectors is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Microsectors Gold 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsectors Gold 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 Microsectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsectors Gold has no effect on the direction of Citigroup i.e., Citigroup and Microsectors Gold go up and down completely randomly.
Pair Corralation between Citigroup and Microsectors Gold
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.51 times more return on investment than Microsectors Gold. However, Citigroup is 1.97 times less risky than Microsectors Gold. It trades about 0.21 of its potential returns per unit of risk. Microsectors Gold 3x is currently generating about -0.15 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Microsectors Gold 3x
Performance |
| Timeline |
| Citigroup |
| Microsectors Gold |
Citigroup and Microsectors Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Microsectors Gold
The main advantage of trading using opposite Citigroup and Microsectors Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Microsectors Gold 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 Microsectors Gold will offset losses from the drop in Microsectors Gold's long position.The idea behind Citigroup and Microsectors Gold 3x 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.| Microsectors Gold vs. MicroSectors Gold 3X | Microsectors Gold vs. Direxion Daily SP | Microsectors Gold vs. Direxion Daily FTSE | Microsectors Gold vs. UBS ETRACS |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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