Correlation Between Citigroup and Micromobility

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

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

Diversification Opportunities for Citigroup and Micromobility

-0.83

Correlation Coefficient

Citigroup  Micromobility

Pay attention - limited upside

The 3 months correlation between Citigroup and Micromobility is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Micromobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micromobility 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 Micromobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micromobility has no effect on the direction of Citigroup i.e., Citigroup and Micromobility go up and down completely randomly.

Pair Corralation between Citigroup and Micromobility

If you would invest  6,205  in Citigroup on September 29, 2024 and sell it today you would earn a total of  895.00  from holding Citigroup or generate 14.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Citigroup  vs.  Micromobility

Citigroup

Risk-Adjusted Performance

9 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Micromobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micromobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Micromobility is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Micromobility

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

The idea behind Citigroup and Micromobility 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.