Correlation Between Citigroup and MCBC Holdings
Can any of the company-specific risk be diversified away by investing in both Citigroup and MCBC Holdings 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 MCBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and MCBC Holdings, you can compare the effects of market volatilities on Citigroup and MCBC Holdings 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 MCBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and MCBC Holdings.
Diversification Opportunities for Citigroup and MCBC Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and MCBC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings 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 MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Citigroup i.e., Citigroup and MCBC Holdings go up and down completely randomly.
Pair Corralation between Citigroup and MCBC Holdings
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.47 times more return on investment than MCBC Holdings. However, Citigroup is 2.12 times less risky than MCBC Holdings. It trades about 0.19 of its potential returns per unit of risk. MCBC Holdings is currently generating about -0.11 per unit of risk. If you would invest 6,900 in Citigroup on September 18, 2024 and sell it today you would earn a total of 212.00 from holding Citigroup or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. MCBC Holdings
Performance |
| Timeline |
| Citigroup |
| MCBC Holdings |
Citigroup and MCBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and MCBC Holdings
The main advantage of trading using opposite Citigroup and MCBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, MCBC Holdings 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 MCBC Holdings will offset losses from the drop in MCBC Holdings' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| MCBC Holdings vs. Malibu Boats | MCBC Holdings vs. Onewater Marine | MCBC Holdings vs. Heidrick Struggles International | MCBC Holdings vs. Johnson Outdoors |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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