Correlation Between Citigroup and Maritime Resources

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

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

Diversification Opportunities for Citigroup and Maritime Resources

0.54

Correlation Coefficient

Citigroup  Maritime Resources

Very weak diversification

The 3 months correlation between Citigroup and Maritime is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Maritime Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maritime Resources Corp 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 Maritime Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maritime Resources Corp has no effect on the direction of Citigroup i.e., Citigroup and Maritime Resources go up and down completely randomly.

Pair Corralation between Citigroup and Maritime Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 64.93 times less return on investment than Maritime Resources. But when comparing it to its historical volatility, Citigroup is 7.22 times less risky than Maritime Resources. It trades about 0.02 of its potential returns per unit of risk. Maritime Resources Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Maritime Resources Corp on June 29, 2024 and sell it today you would earn a total of  1.00  from holding Maritime Resources Corp or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Maritime Resources Corp

Citigroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Maritime Resources Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maritime Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Maritime Resources may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Citigroup and Maritime Resources

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

The idea behind Citigroup and Maritime Resources Corp 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.