Correlation Between Citigroup and NOV
Can any of the company-specific risk be diversified away by investing in both Citigroup and NOV 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 NOV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and NOV Inc, you can compare the effects of market volatilities on Citigroup and NOV 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 NOV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and NOV.
Diversification Opportunities for Citigroup and NOV
Very weak diversification
The 3 months correlation between Citigroup and NOV is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc 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 NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Citigroup i.e., Citigroup and NOV go up and down completely randomly.
Pair Corralation between Citigroup and NOV
Given the investment horizon of 90 days Citigroup is expected to generate 35.23 times more return on investment than NOV. However, Citigroup is 35.23 times more volatile than NOV Inc. It trades about 0.12 of its potential returns per unit of risk. NOV Inc is currently generating about 0.13 per unit of risk. If you would invest 84,155 in Citigroup on September 24, 2024 and sell it today you would earn a total of 53,846 from holding Citigroup or generate 63.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Citigroup vs. NOV Inc
Performance |
Timeline |
Citigroup |
NOV Inc |
Citigroup and NOV Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and NOV
The main advantage of trading using opposite Citigroup and NOV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, NOV 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 NOV will offset losses from the drop in NOV's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Banco Bilbao Vizcaya | Citigroup vs. Monster Beverage Corp | Citigroup vs. Walmart |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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