Correlation Between Citigroup and Next Capital

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

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

Diversification Opportunities for Citigroup and Next Capital

-0.82

Correlation Coefficient

Citigroup  Next Capital

Pay attention - limited upside

The 3 months correlation between Citigroup and Next is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Next Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Capital Public 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 Next Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Capital Public has no effect on the direction of Citigroup i.e., Citigroup and Next Capital go up and down completely randomly.

Pair Corralation between Citigroup and Next Capital

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.43 times more return on investment than Next Capital. However, Citigroup is 2.34 times less risky than Next Capital. It trades about 0.06 of its potential returns per unit of risk. Next Capital Public is currently generating about 0.01 per unit of risk. If you would invest  6,227  in Citigroup on September 28, 2024 and sell it today you would earn a total of  873.00  from holding Citigroup or generate 14.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.6%
Values	Daily Returns

Citigroup  vs.  Next Capital Public

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Next Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Next Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Next Capital

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

The idea behind Citigroup and Next Capital Public 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 Managers module to screen money managers from public funds and ETFs managed around the world.