Correlation Between Citigroup and Northwest Pipe
Can any of the company-specific risk be diversified away by investing in both Citigroup and Northwest Pipe 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 Northwest Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Northwest Pipe, you can compare the effects of market volatilities on Citigroup and Northwest Pipe 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 Northwest Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Northwest Pipe.
Diversification Opportunities for Citigroup and Northwest Pipe
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Northwest is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Northwest Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Pipe 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 Northwest Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Pipe has no effect on the direction of Citigroup i.e., Citigroup and Northwest Pipe go up and down completely randomly.
Pair Corralation between Citigroup and Northwest Pipe
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.79 times more return on investment than Northwest Pipe. However, Citigroup is 1.27 times less risky than Northwest Pipe. It trades about 0.08 of its potential returns per unit of risk. Northwest Pipe is currently generating about 0.04 per unit of risk. If you would invest 4,685 in Citigroup on November 19, 2024 and sell it today you would earn a total of 3,776 from holding Citigroup or generate 80.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Northwest Pipe
Performance |
| Timeline |
| Citigroup |
| Northwest Pipe |
Citigroup and Northwest Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Northwest Pipe
The main advantage of trading using opposite Citigroup and Northwest Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Northwest Pipe 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 Northwest Pipe will offset losses from the drop in Northwest Pipe's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Northwest Pipe vs. Insteel Industries | Northwest Pipe vs. Carpenter Technology | Northwest Pipe vs. ESAB Corp | Northwest Pipe vs. Gulf Island Fabrication |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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