Correlation Between Citigroup and Millenium Hotels

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

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

Diversification Opportunities for Citigroup and Millenium Hotels

-0.06

Correlation Coefficient

Citigroup  Millenium Hotels

Good diversification

The 3 months correlation between Citigroup and Millenium is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real 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 Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Citigroup i.e., Citigroup and Millenium Hotels go up and down completely randomly.

Pair Corralation between Citigroup and Millenium Hotels

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.12 times more return on investment than Millenium Hotels. However, Citigroup is 2.12 times more volatile than Millenium Hotels Real. It trades about 0.04 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about -0.17 per unit of risk. If you would invest  6,929  in Citigroup on December 22, 2024 and sell it today you would earn a total of  269.00  from holding Citigroup or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Citigroup  vs.  Millenium Hotels Real

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Millenium Hotels Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Millenium Hotels Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Citigroup and Millenium Hotels

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

The idea behind Citigroup and Millenium Hotels Real 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.