Correlation Between Citigroup and Mainstay Nerstone

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

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

Diversification Opportunities for Citigroup and Mainstay Nerstone

0.81

Correlation Coefficient

Citigroup  Mainstay Nerstone

Very poor diversification

The 3 months correlation between Citigroup and Mainstay is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Mainstay Nerstone Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Nerstone Growth 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 Mainstay Nerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Nerstone Growth has no effect on the direction of Citigroup i.e., Citigroup and Mainstay Nerstone go up and down completely randomly.

Pair Corralation between Citigroup and Mainstay Nerstone

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.29 times more return on investment than Mainstay Nerstone. However, Citigroup is 2.29 times more volatile than Mainstay Nerstone Growth. It trades about 0.26 of its potential returns per unit of risk. Mainstay Nerstone Growth is currently generating about 0.28 per unit of risk. If you would invest  6,361  in Citigroup on September 1, 2024 and sell it today you would earn a total of  726.00  from holding Citigroup or generate 11.41% return on investment over 90 days.

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

Citigroup  vs.  Mainstay Nerstone Growth

Citigroup

Risk-Adjusted Performance

10 of 100

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.

Mainstay Nerstone Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Nerstone Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mainstay Nerstone may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Citigroup and Mainstay Nerstone

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

The idea behind Citigroup and Mainstay Nerstone Growth 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.