Correlation Between Citigroup and Nationwide Bailard

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

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

Diversification Opportunities for Citigroup and Nationwide Bailard

-0.29

Correlation Coefficient

Citigroup  Nationwide Bailard

Very good diversification

The 3 months correlation between Citigroup and Nationwide is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nationwide Bailard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bailard 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 Bailard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bailard has no effect on the direction of Citigroup i.e., Citigroup and Nationwide Bailard go up and down completely randomly.

Pair Corralation between Citigroup and Nationwide Bailard

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.04 times more return on investment than Nationwide Bailard. However, Citigroup is 1.04 times more volatile than Nationwide Bailard Technology. It trades about 0.11 of its potential returns per unit of risk. Nationwide Bailard Technology is currently generating about 0.02 per unit of risk. If you would invest  5,217  in Citigroup on October 23, 2024 and sell it today you would earn a total of  2,932  from holding Citigroup or generate 56.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Citigroup  vs.  Nationwide Bailard Technology

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.

Nationwide Bailard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Bailard Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Bailard

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

The idea behind Citigroup and Nationwide Bailard Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.