Correlation Between Citigroup and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Citigroup and Neuberger Berman 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 Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Neuberger Berman Long, you can compare the effects of market volatilities on Citigroup and Neuberger Berman 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 Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Neuberger Berman.
Diversification Opportunities for Citigroup and Neuberger Berman
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Neuberger is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Neuberger Berman Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Long 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 Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Long has no effect on the direction of Citigroup i.e., Citigroup and Neuberger Berman go up and down completely randomly.
Pair Corralation between Citigroup and Neuberger Berman
Taking into account the 90-day investment horizon Citigroup is expected to generate 7.27 times more return on investment than Neuberger Berman. However, Citigroup is 7.27 times more volatile than Neuberger Berman Long. It trades about 0.21 of its potential returns per unit of risk. Neuberger Berman Long is currently generating about 0.28 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Neuberger Berman Long
Performance |
| Timeline |
| Citigroup |
| Neuberger Berman Long |
Citigroup and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Neuberger Berman
The main advantage of trading using opposite Citigroup and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Neuberger Berman 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 Neuberger Berman will offset losses from the drop in Neuberger Berman's long position.The idea behind Citigroup and Neuberger Berman Long pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Neuberger Berman vs. Oppenheimer Gold Special | Neuberger Berman vs. James Balanced Golden | Neuberger Berman vs. Goldman Sachs Mlp | Neuberger Berman vs. Short Precious Metals |
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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