Correlation Between Citigroup and GoPro

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

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

Diversification Opportunities for Citigroup and GoPro

-0.64

Correlation Coefficient

Citigroup  GoPro

Excellent diversification

The 3 months correlation between Citigroup and GoPro is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc 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 GoPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoPro Inc has no effect on the direction of Citigroup i.e., Citigroup and GoPro go up and down completely randomly.

Pair Corralation between Citigroup and GoPro

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than GoPro. However, Citigroup is 2.2 times less risky than GoPro. It trades about 0.15 of its potential returns per unit of risk. GoPro Inc is currently generating about -0.1 per unit of risk. If you would invest  5,626  in Citigroup on February 4, 2024 and sell it today you would earn a total of  526.00  from holding Citigroup or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

Citigroup  vs.  GoPro Inc

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 may actually be approaching a critical reversion point that can send shares even higher in June 2024.

GoPro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoPro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Citigroup and GoPro

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

The idea behind Citigroup and GoPro Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.