Correlation Between Citigroup and Metro

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

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

Diversification Opportunities for Citigroup and Metro

-0.02

Correlation Coefficient

Citigroup  Metro

Good diversification

The 3 months correlation between Citigroup and Metro is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc 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 Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Citigroup i.e., Citigroup and Metro go up and down completely randomly.

Pair Corralation between Citigroup and Metro

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.01 times less return on investment than Metro. In addition to that, Citigroup is 1.65 times more volatile than Metro Inc. It trades about 0.03 of its total potential returns per unit of risk. Metro Inc is currently generating about 0.11 per unit of volatility. If you would invest  6,284  in Metro Inc on December 28, 2024 and sell it today you would earn a total of  486.00  from holding Metro Inc or generate 7.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Metro Inc

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.

Metro Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Metro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Metro

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

The idea behind Citigroup and Metro Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.