Correlation Between Citigroup and Nationwide Highmark
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nationwide Highmark 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 Nationwide Highmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nationwide Highmark Small, you can compare the effects of market volatilities on Citigroup and Nationwide Highmark 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 Nationwide Highmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nationwide Highmark.
Diversification Opportunities for Citigroup and Nationwide Highmark
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Nationwide is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nationwide Highmark Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Highmark Small 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 Nationwide Highmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Highmark Small has no effect on the direction of Citigroup i.e., Citigroup and Nationwide Highmark go up and down completely randomly.
Pair Corralation between Citigroup and Nationwide Highmark
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.43 times more return on investment than Nationwide Highmark. However, Citigroup is 1.43 times more volatile than Nationwide Highmark Small. It trades about 0.08 of its potential returns per unit of risk. Nationwide Highmark Small is currently generating about 0.05 per unit of risk. If you would invest 4,544 in Citigroup on September 1, 2024 and sell it today you would earn a total of 2,543 from holding Citigroup or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Citigroup vs. Nationwide Highmark Small
Performance |
| Timeline |
| Citigroup |
| Nationwide Highmark Small |
Citigroup and Nationwide Highmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nationwide Highmark
The main advantage of trading using opposite Citigroup and Nationwide Highmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nationwide Highmark 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 Nationwide Highmark will offset losses from the drop in Nationwide Highmark's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Nationwide Highmark vs. Nationwide Highmark Small | Nationwide Highmark vs. Nationwide Highmark Small | Nationwide Highmark vs. Fam Value Fund | Nationwide Highmark vs. Janus Venture Fund |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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