Correlation Between Meta Platforms and Citigroup
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Citigroup 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 Meta Platforms and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Citigroup, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Citigroup.
Diversification Opportunities for Meta Platforms and Citigroup
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meta and Citigroup is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Meta Platforms 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 Meta Platforms 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 has no effect on the direction of Meta Platforms i.e., Meta Platforms and Citigroup go up and down completely randomly.
Pair Corralation between Meta Platforms and Citigroup
Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Citigroup. In addition to that, Meta Platforms is 1.9 times more volatile than Citigroup. It trades about -0.14 of its total potential returns per unit of risk. Citigroup is currently generating about 0.04 per unit of volatility. If you would invest 4,756 in Citigroup on January 25, 2024 and sell it today you would earn a total of 1,511 from holding Citigroup or generate 31.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 7.49% |
Values | Daily Returns |
Meta Platforms vs. Citigroup
Performance |
Timeline |
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup |
Meta Platforms and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meta Platforms and Citigroup
The main advantage of trading using opposite Meta Platforms and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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