Correlation Between Citigroup and Neste Oyj
Can any of the company-specific risk be diversified away by investing in both Citigroup and Neste Oyj 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 Neste Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Neste Oyj, you can compare the effects of market volatilities on Citigroup and Neste Oyj 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 Neste Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Neste Oyj.
Diversification Opportunities for Citigroup and Neste Oyj
Excellent diversification
The 3 months correlation between Citigroup and Neste is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj 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 Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of Citigroup i.e., Citigroup and Neste Oyj go up and down completely randomly.
Pair Corralation between Citigroup and Neste Oyj
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.38 times more return on investment than Neste Oyj. However, Citigroup is 2.62 times less risky than Neste Oyj. It trades about 0.08 of its potential returns per unit of risk. Neste Oyj is currently generating about -0.08 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 66.84% |
| Values | Daily Returns |
Citigroup vs. Neste Oyj
Performance |
| Timeline |
| Citigroup |
| Neste Oyj |
Citigroup and Neste Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Neste Oyj
The main advantage of trading using opposite Citigroup and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Neste Oyj 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 Neste Oyj will offset losses from the drop in Neste Oyj's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Neste Oyj vs. Cosan SA ADR | Neste Oyj vs. Ultrapar Participacoes SA | Neste Oyj vs. Delek Logistics Partners | Neste Oyj vs. Sunoco LP |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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