Correlation Between Citigroup and MKS Instruments
Can any of the company-specific risk be diversified away by investing in both Citigroup and MKS Instruments 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 MKS Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and MKS Instruments, you can compare the effects of market volatilities on Citigroup and MKS Instruments 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 MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and MKS Instruments.
Diversification Opportunities for Citigroup and MKS Instruments
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and MKS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments 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 MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of Citigroup i.e., Citigroup and MKS Instruments go up and down completely randomly.
Pair Corralation between Citigroup and MKS Instruments
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.59 times more return on investment than MKS Instruments. However, Citigroup is 1.7 times less risky than MKS Instruments. It trades about 0.07 of its potential returns per unit of risk. MKS Instruments is currently generating about 0.04 per unit of risk. If you would invest 4,145 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,839 from holding Citigroup or generate 68.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. MKS Instruments
Performance |
| Timeline |
| Citigroup |
| MKS Instruments |
Citigroup and MKS Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and MKS Instruments
The main advantage of trading using opposite Citigroup and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, MKS Instruments 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 MKS Instruments will offset losses from the drop in MKS Instruments' long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| MKS Instruments vs. Vontier Corp | MKS Instruments vs. Teledyne Technologies Incorporated | MKS Instruments vs. ESCO Technologies | MKS Instruments vs. Sensata Technologies Holding |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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