Correlation Between Citigroup and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Citigroup and Medical Properties 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 Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Medical Properties Trust, you can compare the effects of market volatilities on Citigroup and Medical Properties 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 Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Medical Properties.
Diversification Opportunities for Citigroup and Medical Properties
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Medical is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust 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 Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Citigroup i.e., Citigroup and Medical Properties go up and down completely randomly.
Pair Corralation between Citigroup and Medical Properties
Taking into account the 90-day investment horizon Citigroup is expected to generate 13.43 times less return on investment than Medical Properties. But when comparing it to its historical volatility, Citigroup is 4.09 times less risky than Medical Properties. It trades about 0.05 of its potential returns per unit of risk. Medical Properties Trust is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 386.00 in Medical Properties Trust on January 26, 2024 and sell it today you would earn a total of 71.00 from holding Medical Properties Trust or generate 18.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Medical Properties Trust
Performance |
| Timeline |
| Citigroup |
| Medical Properties Trust |
Citigroup and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Medical Properties
The main advantage of trading using opposite Citigroup and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Medical Properties vs. Sabra Healthcare REIT | Medical Properties vs. LTC Properties | Medical Properties vs. Healthpeak Properties | Medical Properties vs. National Health Investors |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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