Correlation Between Citigroup and MMEX Resources

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

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

Diversification Opportunities for Citigroup and MMEX Resources

-0.34

Correlation Coefficient

Citigroup  MMEX Resources

Very good diversification

The 3 months correlation between Citigroup and MMEX is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and MMEX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMEX Resources Corp 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 MMEX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMEX Resources Corp has no effect on the direction of Citigroup i.e., Citigroup and MMEX Resources go up and down completely randomly.

Pair Corralation between Citigroup and MMEX Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 874.65 times less return on investment than MMEX Resources. But when comparing it to its historical volatility, Citigroup is 126.08 times less risky than MMEX Resources. It trades about 0.03 of its potential returns per unit of risk. MMEX Resources Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  0.02  in MMEX Resources Corp on December 28, 2024 and sell it today you would lose (0.02) from holding MMEX Resources Corp or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  MMEX Resources Corp

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) 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.

MMEX Resources Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MMEX Resources Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, MMEX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and MMEX Resources

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

The idea behind Citigroup and MMEX Resources Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.