Correlation Between Citigroup and Nuscale Power
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nuscale Power 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 Nuscale Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nuscale Power Corp, you can compare the effects of market volatilities on Citigroup and Nuscale Power 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 Nuscale Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nuscale Power.
Diversification Opportunities for Citigroup and Nuscale Power
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Nuscale is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power Corp 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Citigroup i.e., Citigroup and Nuscale Power go up and down completely randomly.
Pair Corralation between Citigroup and Nuscale Power
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.65 times less return on investment than Nuscale Power. But when comparing it to its historical volatility, Citigroup is 3.57 times less risky than Nuscale Power. It trades about 0.21 of its potential returns per unit of risk. Nuscale Power Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,080 in Nuscale Power Corp on August 31, 2024 and sell it today you would earn a total of 726.00 from holding Nuscale Power Corp or generate 34.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Nuscale Power Corp
Performance |
| Timeline |
| Citigroup |
| Nuscale Power Corp |
Citigroup and Nuscale Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nuscale Power
The main advantage of trading using opposite Citigroup and Nuscale Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nuscale Power 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 Nuscale Power will offset losses from the drop in Nuscale Power's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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