Correlation Between Citigroup and NORTHWELL

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

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

Diversification Opportunities for Citigroup and NORTHWELL

-0.64

Correlation Coefficient

Citigroup  NORTHWELL

Excellent diversification

The 3 months correlation between Citigroup and NORTHWELL is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and NORTHWELL HEALTHCARE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHWELL HEALTHCARE INC 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 NORTHWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHWELL HEALTHCARE INC has no effect on the direction of Citigroup i.e., Citigroup and NORTHWELL go up and down completely randomly.

Pair Corralation between Citigroup and NORTHWELL

Taking into account the 90-day investment horizon Citigroup is expected to generate 82.46 times less return on investment than NORTHWELL. But when comparing it to its historical volatility, Citigroup is 69.15 times less risky than NORTHWELL. It trades about 0.08 of its potential returns per unit of risk. NORTHWELL HEALTHCARE INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,516  in NORTHWELL HEALTHCARE INC on December 3, 2024 and sell it today you would lose (179.00) from holding NORTHWELL HEALTHCARE INC or give up 2.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.66%
Values	Daily Returns

Citigroup  vs.  NORTHWELL HEALTHCARE INC

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

NORTHWELL HEALTHCARE INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days NORTHWELL HEALTHCARE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NORTHWELL 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 NORTHWELL

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

The idea behind Citigroup and NORTHWELL HEALTHCARE INC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.