Correlation Between Citigroup and Northland Power
Can any of the company-specific risk be diversified away by investing in both Citigroup and Northland Power 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 Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Northland Power, you can compare the effects of market volatilities on Citigroup and Northland Power 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 Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Northland Power.
Diversification Opportunities for Citigroup and Northland Power
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Northland is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power 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 Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of Citigroup i.e., Citigroup and Northland Power go up and down completely randomly.
Pair Corralation between Citigroup and Northland Power
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.54 times more return on investment than Northland Power. However, Citigroup is 1.84 times less risky than Northland Power. It trades about 0.12 of its potential returns per unit of risk. Northland Power is currently generating about 0.0 per unit of risk. If you would invest 4,364 in Citigroup on September 14, 2024 and sell it today you would earn a total of 2,737 from holding Citigroup or generate 62.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.53% |
| Values | Daily Returns |
Citigroup vs. Northland Power
Performance |
| Timeline |
| Citigroup |
| Northland Power |
Citigroup and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Northland Power
The main advantage of trading using opposite Citigroup and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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