Correlation Between Citigroup and Molecular Partners
Can any of the company-specific risk be diversified away by investing in both Citigroup and Molecular Partners 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 Molecular Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Molecular Partners AG, you can compare the effects of market volatilities on Citigroup and Molecular Partners 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 Molecular Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Molecular Partners.
Diversification Opportunities for Citigroup and Molecular Partners
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Molecular is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Molecular Partners AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molecular Partners 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 Molecular Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molecular Partners has no effect on the direction of Citigroup i.e., Citigroup and Molecular Partners go up and down completely randomly.
Pair Corralation between Citigroup and Molecular Partners
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.34 times more return on investment than Molecular Partners. However, Citigroup is 2.94 times less risky than Molecular Partners. It trades about 0.23 of its potential returns per unit of risk. Molecular Partners AG is currently generating about -0.13 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 2024 and sell it today you would earn a total of 624.00 from holding Citigroup or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Molecular Partners AG
Performance |
| Timeline |
| Citigroup |
| Molecular Partners |
Citigroup and Molecular Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Molecular Partners
The main advantage of trading using opposite Citigroup and Molecular Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Molecular Partners 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 Molecular Partners will offset losses from the drop in Molecular Partners' long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Molecular Partners vs. Mineralys Therapeutics, Common | Molecular Partners vs. AN2 Therapeutics | Molecular Partners vs. Pharvaris BV | Molecular Partners vs. PepGen |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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