Correlation Between Citigroup and Nidec
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nidec 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 Nidec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nidec, you can compare the effects of market volatilities on Citigroup and Nidec 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 Nidec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nidec.
Diversification Opportunities for Citigroup and Nidec
Very good diversification
The 3 months correlation between Citigroup and Nidec is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec 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 Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Citigroup i.e., Citigroup and Nidec go up and down completely randomly.
Pair Corralation between Citigroup and Nidec
Taking into account the 90-day investment horizon Citigroup is expected to generate 12.57 times less return on investment than Nidec. But when comparing it to its historical volatility, Citigroup is 14.94 times less risky than Nidec. It trades about 0.12 of its potential returns per unit of risk. Nidec is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,836 in Nidec on August 25, 2024 and sell it today you would lose (130.00) from holding Nidec or give up 7.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Citigroup vs. Nidec
Performance |
| Timeline |
| Citigroup |
| Nidec |
Citigroup and Nidec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nidec
The main advantage of trading using opposite Citigroup and Nidec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nidec 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 Nidec will offset losses from the drop in Nidec's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Nidec vs. Daifuku Co | Nidec vs. Eaton PLC | Nidec vs. Yokogawa Electric Corp | Nidec vs. Brewbilt Manufacturing |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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