Correlation Between Citigroup and Nan Pao
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nan Pao 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 Nan Pao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nan Pao Resins, you can compare the effects of market volatilities on Citigroup and Nan Pao 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 Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nan Pao.
Diversification Opportunities for Citigroup and Nan Pao
Very weak diversification
The 3 months correlation between Citigroup and Nan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins 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 Nan Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of Citigroup i.e., Citigroup and Nan Pao go up and down completely randomly.
Pair Corralation between Citigroup and Nan Pao
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Nan Pao. In addition to that, Citigroup is 1.08 times more volatile than Nan Pao Resins. It trades about -0.08 of its total potential returns per unit of risk. Nan Pao Resins is currently generating about 0.13 per unit of volatility. If you would invest 32,500 in Nan Pao Resins on November 28, 2024 and sell it today you would earn a total of 1,050 from holding Nan Pao Resins or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Citigroup vs. Nan Pao Resins
Performance |
| Timeline |
| Citigroup |
| Nan Pao Resins |
Citigroup and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nan Pao
The main advantage of trading using opposite Citigroup and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nan Pao 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 Nan Pao will offset losses from the drop in Nan Pao'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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