Correlation Between Citigroup and Mackenzie Bluewater

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

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

Diversification Opportunities for Citigroup and Mackenzie Bluewater

0.71

Correlation Coefficient

Citigroup  Mackenzie Bluewater

Poor diversification

The 3 months correlation between Citigroup and Mackenzie is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Mackenzie Bluewater Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Bluewater 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 Mackenzie Bluewater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Bluewater has no effect on the direction of Citigroup i.e., Citigroup and Mackenzie Bluewater go up and down completely randomly.

Pair Corralation between Citigroup and Mackenzie Bluewater

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.08 times less return on investment than Mackenzie Bluewater. In addition to that, Citigroup is 2.79 times more volatile than Mackenzie Bluewater Canadian. It trades about 0.01 of its total potential returns per unit of risk. Mackenzie Bluewater Canadian is currently generating about 0.04 per unit of volatility. If you would invest  1,835  in Mackenzie Bluewater Canadian on December 30, 2024 and sell it today you would earn a total of  34.00  from holding Mackenzie Bluewater Canadian or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Mackenzie Bluewater Canadian

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.

Mackenzie Bluewater

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Bluewater Canadian are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, Mackenzie Bluewater is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Mackenzie Bluewater

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

The idea behind Citigroup and Mackenzie Bluewater Canadian 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.