Correlation Between Citigroup and M3 Brigade
Can any of the company-specific risk be diversified away by investing in both Citigroup and M3 Brigade 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 M3 Brigade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and M3 Brigade Acquisition V, you can compare the effects of market volatilities on Citigroup and M3 Brigade 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 M3 Brigade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and M3 Brigade.
Diversification Opportunities for Citigroup and M3 Brigade
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and MBAV is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and M3 Brigade Acquisition V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Brigade Acquisition 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 M3 Brigade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Brigade Acquisition has no effect on the direction of Citigroup i.e., Citigroup and M3 Brigade go up and down completely randomly.
Pair Corralation between Citigroup and M3 Brigade
Taking into account the 90-day investment horizon Citigroup is expected to generate 17.62 times more return on investment than M3 Brigade. However, Citigroup is 17.62 times more volatile than M3 Brigade Acquisition V. It trades about 0.07 of its potential returns per unit of risk. M3 Brigade Acquisition V is currently generating about 0.11 per unit of risk. If you would invest 4,293 in Citigroup on September 3, 2024 and sell it today you would earn a total of 2,794 from holding Citigroup or generate 65.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 10.1% |
| Values | Daily Returns |
Citigroup vs. M3 Brigade Acquisition V
Performance |
| Timeline |
| Citigroup |
| M3 Brigade Acquisition |
Citigroup and M3 Brigade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and M3 Brigade
The main advantage of trading using opposite Citigroup and M3 Brigade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, M3 Brigade 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 M3 Brigade will offset losses from the drop in M3 Brigade's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| M3 Brigade vs. Kaiser Aluminum | M3 Brigade vs. National Vision Holdings | M3 Brigade vs. SunLink Health Systems | M3 Brigade vs. Titan Machinery |
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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