Correlation Between Citigroup and Jack Nathan

Can any of the company-specific risk be diversified away by investing in both Citigroup and Jack Nathan 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 Jack Nathan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Jack Nathan Medical, you can compare the effects of market volatilities on Citigroup and Jack Nathan 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 Jack Nathan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Jack Nathan.

Diversification Opportunities for Citigroup and Jack Nathan

-0.25

Correlation Coefficient

Citigroup  Jack Nathan

Very good diversification

The 3 months correlation between Citigroup and Jack is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Jack Nathan Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Nathan Medical 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 Jack Nathan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Nathan Medical has no effect on the direction of Citigroup i.e., Citigroup and Jack Nathan go up and down completely randomly.

Pair Corralation between Citigroup and Jack Nathan

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times less return on investment than Jack Nathan. But when comparing it to its historical volatility, Citigroup is 8.61 times less risky than Jack Nathan. It trades about 0.28 of its potential returns per unit of risk. Jack Nathan Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Jack Nathan Medical on October 25, 2024 and sell it today you would lose (1.00) from holding Jack Nathan Medical or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  Jack Nathan Medical

Citigroup

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

Jack Nathan Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Nathan Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Jack Nathan showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Jack Nathan

The main advantage of trading using opposite Citigroup and Jack Nathan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Jack Nathan 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 Jack Nathan will offset losses from the drop in Jack Nathan's long position.

The idea behind Citigroup and Jack Nathan Medical 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.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.