Correlation Between Citigroup and Max Zipper

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

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

Diversification Opportunities for Citigroup and Max Zipper

0.27

Correlation Coefficient

Citigroup  Max Zipper

Modest diversification

The 3 months correlation between Citigroup and Max is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Max Zipper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Zipper 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 Max Zipper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Zipper has no effect on the direction of Citigroup i.e., Citigroup and Max Zipper go up and down completely randomly.

Pair Corralation between Citigroup and Max Zipper

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.38 times more return on investment than Max Zipper. However, Citigroup is 2.64 times less risky than Max Zipper. It trades about 0.09 of its potential returns per unit of risk. Max Zipper Co is currently generating about -0.04 per unit of risk. If you would invest  5,890  in Citigroup on September 19, 2024 and sell it today you would earn a total of  1,222  from holding Citigroup or generate 20.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  Max Zipper Co

Citigroup

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Max Zipper

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Max Zipper

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

The idea behind Citigroup and Max Zipper 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.