Correlation Between Citigroup and RMR
Can any of the company-specific risk be diversified away by investing in both Citigroup and RMR 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 RMR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and RMR Group, you can compare the effects of market volatilities on Citigroup and RMR 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 RMR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and RMR.
Diversification Opportunities for Citigroup and RMR
Excellent diversification
The 3 months correlation between Citigroup and RMR is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and RMR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMR Group 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 RMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMR Group has no effect on the direction of Citigroup i.e., Citigroup and RMR go up and down completely randomly.
Pair Corralation between Citigroup and RMR
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.99 times more return on investment than RMR. However, Citigroup is 1.01 times less risky than RMR. It trades about 0.07 of its potential returns per unit of risk. RMR Group is currently generating about 0.0 per unit of risk. If you would invest 4,117 in Citigroup on August 28, 2024 and sell it today you would earn a total of 2,958 from holding Citigroup or generate 71.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. RMR Group
Performance |
| Timeline |
| Citigroup |
| RMR Group |
Citigroup and RMR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and RMR
The main advantage of trading using opposite Citigroup and RMR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, RMR 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 RMR will offset losses from the drop in RMR's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| RMR vs. Investcorp Credit Management | RMR vs. Medalist Diversified Reit | RMR vs. Aquagold International | RMR vs. Morningstar Unconstrained Allocation |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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