Correlation Between Citigroup and Melnick Even

Can any of the company-specific risk be diversified away by investing in both Citigroup and Melnick Even 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 Melnick Even into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Melnick Even Desenvolvimento, you can compare the effects of market volatilities on Citigroup and Melnick Even 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 Melnick Even. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Melnick Even.

Diversification Opportunities for Citigroup and Melnick Even

-0.11

Correlation Coefficient

Citigroup  Melnick Even

Good diversification

The 3 months correlation between Citigroup and Melnick is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Melnick Even Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melnick Even Desenvo 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 Melnick Even. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melnick Even Desenvo has no effect on the direction of Citigroup i.e., Citigroup and Melnick Even go up and down completely randomly.

Pair Corralation between Citigroup and Melnick Even

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Melnick Even. However, Citigroup is 1.47 times less risky than Melnick Even. It trades about 0.07 of its potential returns per unit of risk. Melnick Even Desenvolvimento is currently generating about 0.04 per unit of risk. If you would invest  4,308  in Citigroup on September 26, 2024 and sell it today you would earn a total of  2,792  from holding Citigroup or generate 64.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Citigroup  vs.  Melnick Even Desenvolvimento

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Melnick Even Desenvo

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Melnick Even Desenvolvimento are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Melnick Even is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Melnick Even

The main advantage of trading using opposite Citigroup and Melnick Even positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Melnick Even 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 Melnick Even will offset losses from the drop in Melnick Even's long position.

The idea behind Citigroup and Melnick Even Desenvolvimento 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.