Correlation Between Merck and CITIGROUP
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By analyzing existing cross correlation between Merck Company and CITIGROUP INC, you can compare the effects of market volatilities on Merck and CITIGROUP 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 Merck with a short position of CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and CITIGROUP.
Diversification Opportunities for Merck and CITIGROUP
Poor diversification
The 3 months correlation between Merck and CITIGROUP is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and CITIGROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC and Merck 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 Merck Company are associated (or correlated) with CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP INC has no effect on the direction of Merck i.e., Merck and CITIGROUP go up and down completely randomly.
Pair Corralation between Merck and CITIGROUP
Considering the 90-day investment horizon Merck Company is expected to under-perform the CITIGROUP. In addition to that, Merck is 1.78 times more volatile than CITIGROUP INC. It trades about 0.0 of its total potential returns per unit of risk. CITIGROUP INC is currently generating about 0.01 per unit of volatility. If you would invest 8,448 in CITIGROUP INC on September 1, 2024 and sell it today you would earn a total of 57.00 from holding CITIGROUP INC or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Merck Company vs. CITIGROUP INC
Performance |
| Timeline |
| Merck Company |
| CITIGROUP INC |
Merck and CITIGROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and CITIGROUP
The main advantage of trading using opposite Merck and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, CITIGROUP 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 CITIGROUP will offset losses from the drop in CITIGROUP's long position.The idea behind Merck Company and CITIGROUP INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CITIGROUP vs. AEP TEX INC | CITIGROUP vs. US BANK NATIONAL | CITIGROUP vs. American Express | CITIGROUP vs. Chevron Corp |
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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