Correlation Between Citigroup and Nissan
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nissan 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 Nissan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nissan, you can compare the effects of market volatilities on Citigroup and Nissan 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 Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nissan.
Diversification Opportunities for Citigroup and Nissan
Weak diversification
The 3 months correlation between Citigroup and Nissan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nissan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan 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 Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan has no effect on the direction of Citigroup i.e., Citigroup and Nissan go up and down completely randomly.
Pair Corralation between Citigroup and Nissan
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.79 times less return on investment than Nissan. In addition to that, Citigroup is 1.11 times more volatile than Nissan. It trades about 0.21 of its total potential returns per unit of risk. Nissan is currently generating about 0.42 per unit of volatility. If you would invest 143,900 in Nissan on August 29, 2024 and sell it today you would earn a total of 21,600 from holding Nissan or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.61% |
| Values | Daily Returns |
Citigroup vs. Nissan
Performance |
| Timeline |
| Citigroup |
| Nissan |
Citigroup and Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nissan
The main advantage of trading using opposite Citigroup and Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nissan 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 Nissan will offset losses from the drop in Nissan's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Nissan vs. Adgar Investments and | Nissan vs. Millennium Food Tech LP | Nissan vs. Willy Food | Nissan vs. Harel Insurance Investments |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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