Correlation Between Citigroup and MBT Bancshares
Can any of the company-specific risk be diversified away by investing in both Citigroup and MBT Bancshares 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 MBT Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and MBT Bancshares, you can compare the effects of market volatilities on Citigroup and MBT Bancshares 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 MBT Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and MBT Bancshares.
Diversification Opportunities for Citigroup and MBT Bancshares
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and MBT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares 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 MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of Citigroup i.e., Citigroup and MBT Bancshares go up and down completely randomly.
Pair Corralation between Citigroup and MBT Bancshares
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.3 times more return on investment than MBT Bancshares. However, Citigroup is 3.3 times more volatile than MBT Bancshares. It trades about 0.26 of its potential returns per unit of risk. MBT Bancshares is currently generating about 0.22 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. MBT Bancshares
Performance |
| Timeline |
| Citigroup |
| MBT Bancshares |
Citigroup and MBT Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and MBT Bancshares
The main advantage of trading using opposite Citigroup and MBT Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, MBT Bancshares 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 MBT Bancshares will offset losses from the drop in MBT Bancshares' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| MBT Bancshares vs. Huntington Bancshares Incorporated | MBT Bancshares vs. KeyCorp | MBT Bancshares vs. Bank of Idaho | MBT Bancshares vs. Citizens Financial Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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