Correlation Between Citigroup and Nationwide Bny

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

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

Diversification Opportunities for Citigroup and Nationwide Bny

0.05

Correlation Coefficient

Citigroup  Nationwide Bny

Significant diversification

The 3 months correlation between Citigroup and Nationwide is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nationwide Bny Mellon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bny Mellon 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 Nationwide Bny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bny Mellon has no effect on the direction of Citigroup i.e., Citigroup and Nationwide Bny go up and down completely randomly.

Pair Corralation between Citigroup and Nationwide Bny

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Nationwide Bny. In addition to that, Citigroup is 2.04 times more volatile than Nationwide Bny Mellon. It trades about -0.39 of its total potential returns per unit of risk. Nationwide Bny Mellon is currently generating about -0.34 per unit of volatility. If you would invest  1,686  in Nationwide Bny Mellon on December 11, 2024 and sell it today you would lose (123.00) from holding Nationwide Bny Mellon or give up 7.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Nationwide Bny Mellon

Citigroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Nationwide Bny Mellon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nationwide Bny Mellon has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Citigroup and Nationwide Bny

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

The idea behind Citigroup and Nationwide Bny Mellon 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.