Correlation Between Citigroup and Montage Technology

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

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

Diversification Opportunities for Citigroup and Montage Technology

0.3

Correlation Coefficient

Citigroup  Montage Technology

Weak diversification

The 3 months correlation between Citigroup and Montage is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Montage Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montage Technology 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 Montage Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montage Technology has no effect on the direction of Citigroup i.e., Citigroup and Montage Technology go up and down completely randomly.

Pair Corralation between Citigroup and Montage Technology

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Montage Technology. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.91 times less risky than Montage Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Montage Technology Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6,913  in Montage Technology Co on October 3, 2024 and sell it today you would lose (123.00) from holding Montage Technology Co or give up 1.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Montage Technology Co

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Montage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montage Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Citigroup and Montage Technology

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

The idea behind Citigroup and Montage Technology Co 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.