Correlation Between MicroSectors Solactive and CitiGroup

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

By analyzing existing cross correlation between MicroSectors Solactive FANG and CitiGroup, you can compare the effects of market volatilities on MicroSectors Solactive 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 MicroSectors Solactive with a short position of CitiGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Solactive and CitiGroup.

Diversification Opportunities for MicroSectors Solactive and CitiGroup

0.0

Correlation Coefficient

MicroSectors Solactive  CitiGroup

Pay attention - limited upside

The 3 months correlation between MicroSectors and CitiGroup is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Solactive FANG and CitiGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CitiGroup and MicroSectors Solactive 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 MicroSectors Solactive FANG 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 MicroSectors Solactive i.e., MicroSectors Solactive and CitiGroup go up and down completely randomly.

Pair Corralation between MicroSectors Solactive and CitiGroup

If you would invest (100.00) in CitiGroup on February 29, 2024 and sell it today you would earn a total of  100.00  from holding CitiGroup or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MicroSectors Solactive FANG  vs.  CitiGroup

MicroSectors Solactive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroSectors Solactive FANG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

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 comparatively stable basic indicators, CitiGroup 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 MicroSectors Solactive and CitiGroup

The main advantage of trading using opposite MicroSectors Solactive and CitiGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors Solactive 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 MicroSectors Solactive FANG and CitiGroup 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.