Correlation Between Citigroup and Federated Mdt

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

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

Diversification Opportunities for Citigroup and Federated Mdt

0.39

Correlation Coefficient

Citigroup  Federated Mdt

Weak diversification

The 3 months correlation between Citigroup and Federated is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Federated Mdt Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Balanced 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Balanced has no effect on the direction of Citigroup i.e., Citigroup and Federated Mdt go up and down completely randomly.

Pair Corralation between Citigroup and Federated Mdt

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.99 times more return on investment than Federated Mdt. However, Citigroup is 1.99 times more volatile than Federated Mdt Balanced. It trades about 0.07 of its potential returns per unit of risk. Federated Mdt Balanced is currently generating about -0.03 per unit of risk. If you would invest  5,890  in Citigroup on September 19, 2024 and sell it today you would earn a total of  922.00  from holding Citigroup or generate 15.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Federated Mdt Balanced

Citigroup

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Federated Mdt Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Mdt Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Citigroup and Federated Mdt

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

The idea behind Citigroup and Federated Mdt Balanced 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.