Correlation Between Meta Platforms and Citigroup

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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

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Meta and Citigroup is -0.72. 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

If you would invest  94,363  in Citigroup on December 29, 2023 and sell it today you would earn a total of  9,299  from holding Citigroup or generate 9.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

Meta Platforms  vs.  Citigroup

 Performance 
       Timeline  
Meta Platforms 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.
Citigroup 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Citigroup showed solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Meta Platforms 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.
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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