Correlation Between Citigroup and Mmzhx

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

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

Diversification Opportunities for Citigroup and Mmzhx

-0.4

Correlation Coefficient

Citigroup  Mmzhx

Very good diversification

The 3 months correlation between Citigroup and Mmzhx is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Mmzhx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmzhx 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 Mmzhx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmzhx has no effect on the direction of Citigroup i.e., Citigroup and Mmzhx go up and down completely randomly.

Pair Corralation between Citigroup and Mmzhx

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.64 times more return on investment than Mmzhx. However, Citigroup is 1.55 times less risky than Mmzhx. It trades about 0.07 of its potential returns per unit of risk. Mmzhx is currently generating about 0.03 per unit of risk. If you would invest  4,806  in Citigroup on October 23, 2024 and sell it today you would earn a total of  3,193  from holding Citigroup or generate 66.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.36%
Values	Daily Returns

Citigroup  vs.  Mmzhx

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.

Mmzhx

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mmzhx are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Mmzhx 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 Mmzhx

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

The idea behind Citigroup and Mmzhx 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.