Correlation Between Citigroup and Nexans SA

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

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

Diversification Opportunities for Citigroup and Nexans SA

-0.92

Correlation Coefficient

Citigroup  Nexans SA

Pay attention - limited upside

The 3 months correlation between Citigroup and Nexans is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nexans SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexans SA 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 Nexans SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexans SA has no effect on the direction of Citigroup i.e., Citigroup and Nexans SA go up and down completely randomly.

Pair Corralation between Citigroup and Nexans SA

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Nexans SA. In addition to that, Citigroup is 1.12 times more volatile than Nexans SA. It trades about -0.03 of its total potential returns per unit of risk. Nexans SA is currently generating about 0.22 per unit of volatility. If you would invest  10,720  in Nexans SA on September 23, 2024 and sell it today you would earn a total of  528.00  from holding Nexans SA or generate 4.93% return on investment over 90 days.

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

Citigroup  vs.  Nexans SA

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.

Nexans SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexans SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citigroup and Nexans SA

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

The idea behind Citigroup and Nexans SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.