Correlation Between Citigroup and Nedbank
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nedbank 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 Nedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nedbank Group, you can compare the effects of market volatilities on Citigroup and Nedbank 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 Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nedbank.
Diversification Opportunities for Citigroup and Nedbank
Average diversification
The 3 months correlation between Citigroup and Nedbank is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group 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 Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Citigroup i.e., Citigroup and Nedbank go up and down completely randomly.
Pair Corralation between Citigroup and Nedbank
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.4 times less return on investment than Nedbank. In addition to that, Citigroup is 1.24 times more volatile than Nedbank Group. It trades about 0.07 of its total potential returns per unit of risk. Nedbank Group is currently generating about 0.13 per unit of volatility. If you would invest 2,281,856 in Nedbank Group on September 1, 2024 and sell it today you would earn a total of 605,944 from holding Nedbank Group or generate 26.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Citigroup vs. Nedbank Group
Performance |
| Timeline |
| Citigroup |
| Nedbank Group |
Citigroup and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nedbank
The main advantage of trading using opposite Citigroup and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Nedbank vs. Zeder Investments | Nedbank vs. Deneb Investments | Nedbank vs. Hosken Consolidated Investments | Nedbank vs. Copper 360 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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