Correlation Between Citigroup and Novonix
Can any of the company-specific risk be diversified away by investing in both Citigroup and Novonix 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 Novonix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Novonix, you can compare the effects of market volatilities on Citigroup and Novonix 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 Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Novonix.
Diversification Opportunities for Citigroup and Novonix
Excellent diversification
The 3 months correlation between Citigroup and Novonix is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Novonix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix 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 Novonix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonix has no effect on the direction of Citigroup i.e., Citigroup and Novonix go up and down completely randomly.
Pair Corralation between Citigroup and Novonix
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.42 times more return on investment than Novonix. However, Citigroup is 2.39 times less risky than Novonix. It trades about 0.41 of its potential returns per unit of risk. Novonix is currently generating about -0.29 per unit of risk. If you would invest 6,994 in Citigroup on November 3, 2024 and sell it today you would earn a total of 1,149 from holding Citigroup or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Novonix
Performance |
| Timeline |
| Citigroup |
| Novonix |
Citigroup and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Novonix
The main advantage of trading using opposite Citigroup and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Novonix 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 Novonix will offset losses from the drop in Novonix's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Novonix vs. Flux Power Holdings | Novonix vs. NeoVolta Common Stock | Novonix vs. Magnis Energy Technologies | Novonix vs. Espey Mfg Electronics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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