Correlation Between Citigroup and Madison Pacific

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

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

Diversification Opportunities for Citigroup and Madison Pacific

0.63

Correlation Coefficient

Citigroup  Madison Pacific

Poor diversification

The 3 months correlation between Citigroup and Madison is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Madison Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Pacific Prop 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 Madison Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Pacific Prop has no effect on the direction of Citigroup i.e., Citigroup and Madison Pacific go up and down completely randomly.

Pair Corralation between Citigroup and Madison Pacific

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.34 times more return on investment than Madison Pacific. However, Citigroup is 2.97 times less risky than Madison Pacific. It trades about 0.37 of its potential returns per unit of risk. Madison Pacific Properties is currently generating about 0.09 per unit of risk. If you would invest  6,760  in Citigroup on May 1, 2025 and sell it today you would earn a total of  2,688  from holding Citigroup or generate 39.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Madison Pacific Properties

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Madison Pacific Prop

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Madison Pacific Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Madison Pacific displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Madison Pacific

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

The idea behind Citigroup and Madison Pacific Properties 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.