Correlation Between Citigroup and Northern Tax-advantaged

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

By analyzing existing cross correlation between Citigroup and Northern Tax Advantaged Ultra Short, you can compare the effects of market volatilities on Citigroup and Northern Tax-advantaged 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 Northern Tax-advantaged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Northern Tax-advantaged.

Diversification Opportunities for Citigroup and Northern Tax-advantaged

0.09

Correlation Coefficient

Citigroup  Northern Tax-advantaged

Significant diversification

The 3 months correlation between Citigroup and Northern is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Northern Tax Advantaged Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Tax Advantaged 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 Northern Tax-advantaged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Tax Advantaged has no effect on the direction of Citigroup i.e., Citigroup and Northern Tax-advantaged go up and down completely randomly.

Pair Corralation between Citigroup and Northern Tax-advantaged

Taking into account the 90-day investment horizon Citigroup is expected to generate 28.15 times more return on investment than Northern Tax-advantaged. However, Citigroup is 28.15 times more volatile than Northern Tax Advantaged Ultra Short. It trades about 0.04 of its potential returns per unit of risk. Northern Tax Advantaged Ultra Short is currently generating about 0.16 per unit of risk. If you would invest  7,086  in Citigroup on December 26, 2024 and sell it today you would earn a total of  238.00  from holding Citigroup or generate 3.36% return on investment over 90 days.

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

Citigroup  vs.  Northern Tax Advantaged Ultra

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Northern Tax Advantaged

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Tax Advantaged Ultra Short are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Northern Tax-advantaged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Northern Tax-advantaged

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

The idea behind Citigroup and Northern Tax Advantaged Ultra Short 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..