Correlation Between Citigroup and Micro Systemation
Can any of the company-specific risk be diversified away by investing in both Citigroup and Micro Systemation 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 Micro Systemation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Micro Systemation AB, you can compare the effects of market volatilities on Citigroup and Micro Systemation 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 Micro Systemation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Micro Systemation.
Diversification Opportunities for Citigroup and Micro Systemation
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Micro is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Micro Systemation AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Systemation 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 Micro Systemation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Systemation has no effect on the direction of Citigroup i.e., Citigroup and Micro Systemation go up and down completely randomly.
Pair Corralation between Citigroup and Micro Systemation
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.13 times less return on investment than Micro Systemation. But when comparing it to its historical volatility, Citigroup is 1.41 times less risky than Micro Systemation. It trades about 0.21 of its potential returns per unit of risk. Micro Systemation AB is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,595 in Micro Systemation AB on August 29, 2024 and sell it today you would earn a total of 485.00 from holding Micro Systemation AB or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Micro Systemation AB
Performance |
| Timeline |
| Citigroup |
| Micro Systemation |
Citigroup and Micro Systemation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Micro Systemation
The main advantage of trading using opposite Citigroup and Micro Systemation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Micro Systemation 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 Micro Systemation will offset losses from the drop in Micro Systemation's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Micro Systemation vs. Lifco AB | Micro Systemation vs. Lagercrantz Group AB | Micro Systemation vs. Addtech AB | Micro Systemation vs. Instalco Intressenter AB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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