Correlation Between Citigroup and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nextera Energy 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 Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nextera Energy, you can compare the effects of market volatilities on Citigroup and Nextera Energy 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nextera Energy.
Diversification Opportunities for Citigroup and Nextera Energy
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Nextera is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Citigroup i.e., Citigroup and Nextera Energy go up and down completely randomly.
Pair Corralation between Citigroup and Nextera Energy
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.13 times more return on investment than Nextera Energy. However, Citigroup is 1.13 times more volatile than Nextera Energy. It trades about 0.29 of its potential returns per unit of risk. Nextera Energy is currently generating about -0.14 per unit of risk. If you would invest 6,122 in Citigroup on August 26, 2024 and sell it today you would earn a total of 862.00 from holding Citigroup or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Nextera Energy
Performance |
| Timeline |
| Citigroup |
| Nextera Energy |
Citigroup and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nextera Energy
The main advantage of trading using opposite Citigroup and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Nextera Energy vs. Dominion Energy | Nextera Energy vs. Consolidated Edison | Nextera Energy vs. Eversource Energy | Nextera Energy vs. FirstEnergy |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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