Correlation Between Citigroup and NMC Health

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

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

Diversification Opportunities for Citigroup and NMC Health

-0.6

Correlation Coefficient

Citigroup  NMC Health

Excellent diversification

The 3 months correlation between Citigroup and NMC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and NMC Health PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMC Health PLC 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 NMC Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMC Health PLC has no effect on the direction of Citigroup i.e., Citigroup and NMC Health go up and down completely randomly.

Pair Corralation between Citigroup and NMC Health

If you would invest  0.02  in NMC Health PLC on September 23, 2024 and sell it today you would earn a total of  0.00  from holding NMC Health PLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Citigroup  vs.  NMC Health PLC

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NMC Health PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NMC Health PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, NMC Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and NMC Health

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

The idea behind Citigroup and NMC Health PLC 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.