Correlation Between Citigroup and Metalpha Technology

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

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

Diversification Opportunities for Citigroup and Metalpha Technology

0.38

Correlation Coefficient

Citigroup  Metalpha Technology

Weak diversification

The 3 months correlation between Citigroup and Metalpha is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Metalpha Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalpha 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 Metalpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalpha Technology has no effect on the direction of Citigroup i.e., Citigroup and Metalpha Technology go up and down completely randomly.

Pair Corralation between Citigroup and Metalpha Technology

Taking into account the 90-day investment horizon Citigroup is expected to generate 34.93 times less return on investment than Metalpha Technology. But when comparing it to its historical volatility, Citigroup is 4.03 times less risky than Metalpha Technology. It trades about 0.01 of its potential returns per unit of risk. Metalpha Technology Holding is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Metalpha Technology Holding on December 30, 2024 and sell it today you would earn a total of  62.00  from holding Metalpha Technology Holding or generate 55.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Metalpha Technology Holding

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Metalpha Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metalpha Technology Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Metalpha Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Metalpha Technology

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

The idea behind Citigroup and Metalpha Technology Holding 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.