Correlation Between Citigroup and Merida Industry

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

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

Diversification Opportunities for Citigroup and Merida Industry

-0.84

Correlation Coefficient

Citigroup  Merida Industry

Pay attention - limited upside

The 3 months correlation between Citigroup and Merida is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry 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 Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Citigroup i.e., Citigroup and Merida Industry go up and down completely randomly.

Pair Corralation between Citigroup and Merida Industry

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than Merida Industry. However, Citigroup is 2.2 times less risky than Merida Industry. It trades about 0.18 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.1 per unit of risk. If you would invest  6,980  in Citigroup on September 12, 2024 and sell it today you would earn a total of  224.00  from holding Citigroup or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Citigroup  vs.  Merida Industry Co

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Merida Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merida Industry Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Citigroup and Merida Industry

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

The idea behind Citigroup and Merida Industry 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .