Correlation Between Citigroup and 629377CH3

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Can any of the company-specific risk be diversified away by investing in both Citigroup and 629377CH3 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 629377CH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and NRG Energy 525, you can compare the effects of market volatilities on Citigroup and 629377CH3 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 629377CH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 629377CH3.

Diversification Opportunities for Citigroup and 629377CH3

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Citigroup and 629377CH3 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and NRG Energy 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 525 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 629377CH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy 525 has no effect on the direction of Citigroup i.e., Citigroup and 629377CH3 go up and down completely randomly.

Pair Corralation between Citigroup and 629377CH3

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.22 times more return on investment than 629377CH3. However, Citigroup is 1.22 times more volatile than NRG Energy 525. It trades about 0.21 of its potential returns per unit of risk. NRG Energy 525 is currently generating about -0.21 per unit of risk. If you would invest  6,393  in Citigroup on August 31, 2024 and sell it today you would earn a total of  623.00  from holding Citigroup or generate 9.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Citigroup  vs.  NRG Energy 525

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
NRG Energy 525 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NRG Energy 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NRG Energy 525 investors.

Citigroup and 629377CH3 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and 629377CH3

The main advantage of trading using opposite Citigroup and 629377CH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 629377CH3 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 629377CH3 will offset losses from the drop in 629377CH3's long position.
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The idea behind Citigroup and NRG Energy 525 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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