Correlation Between Citigroup and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nel ASA 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 Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nel ASA, you can compare the effects of market volatilities on Citigroup and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nel ASA.
Diversification Opportunities for Citigroup and Nel ASA
Pay attention - limited upside
The 3 months correlation between Citigroup and Nel is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Citigroup i.e., Citigroup and Nel ASA go up and down completely randomly.
Pair Corralation between Citigroup and Nel ASA
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.48 times more return on investment than Nel ASA. However, Citigroup is 2.09 times less risky than Nel ASA. It trades about 0.24 of its potential returns per unit of risk. Nel ASA is currently generating about -0.36 per unit of risk. If you would invest 6,245 in Citigroup on August 25, 2024 and sell it today you would earn a total of 739.00 from holding Citigroup or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Nel ASA
Performance |
| Timeline |
| Citigroup |
| Nel ASA |
Citigroup and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nel ASA
The main advantage of trading using opposite Citigroup and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Nel ASA vs. Superior Plus Corp | Nel ASA vs. NMI Holdings | Nel ASA vs. Origin Agritech | Nel ASA vs. SIVERS SEMICONDUCTORS AB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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