Correlation Between Citigroup and NAXS Nordic

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

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

Diversification Opportunities for Citigroup and NAXS Nordic

-0.88

Correlation Coefficient

Citigroup  NAXS Nordic

Pay attention - limited upside

The 3 months correlation between Citigroup and NAXS is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and NAXS Nordic Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAXS Nordic Access 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 NAXS Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAXS Nordic Access has no effect on the direction of Citigroup i.e., Citigroup and NAXS Nordic go up and down completely randomly.

Pair Corralation between Citigroup and NAXS Nordic

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the NAXS Nordic. In addition to that, Citigroup is 2.84 times more volatile than NAXS Nordic Access. It trades about -0.09 of its total potential returns per unit of risk. NAXS Nordic Access is currently generating about -0.17 per unit of volatility. If you would invest  5,160  in NAXS Nordic Access on September 24, 2024 and sell it today you would lose (80.00) from holding NAXS Nordic Access or give up 1.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  NAXS Nordic Access

Citigroup

Risk-Adjusted Performance

9 of 100

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

NAXS Nordic Access

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAXS Nordic Access has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Citigroup and NAXS Nordic

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

The idea behind Citigroup and NAXS Nordic Access 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.