Correlation Between CITIGROUP and Northstar Clean

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

By analyzing existing cross correlation between CITIGROUP FDG INC and Northstar Clean Technologies, you can compare the effects of market volatilities on CITIGROUP and Northstar Clean 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 Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIGROUP and Northstar Clean.

Diversification Opportunities for CITIGROUP and Northstar Clean

0.8

Correlation Coefficient

CITIGROUP  Northstar Clean

Very poor diversification

The 3 months correlation between CITIGROUP and Northstar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CITIGROUP FDG INC and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech 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 FDG INC are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of CITIGROUP i.e., CITIGROUP and Northstar Clean go up and down completely randomly.

Pair Corralation between CITIGROUP and Northstar Clean

Assuming the 90 days trading horizon CITIGROUP FDG INC is expected to under-perform the Northstar Clean. But the bond apears to be less risky and, when comparing its historical volatility, CITIGROUP FDG INC is 5.08 times less risky than Northstar Clean. The bond trades about -0.18 of its potential returns per unit of risk. The Northstar Clean Technologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Northstar Clean Technologies on September 24, 2024 and sell it today you would earn a total of  9.00  from holding Northstar Clean Technologies or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	26.56%
Values	Daily Returns

CITIGROUP FDG INC  vs.  Northstar Clean Technologies

CITIGROUP FDG INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIGROUP FDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Bond's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for CITIGROUP FDG INC private investors.

Northstar Clean Tech

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIGROUP and Northstar Clean

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

The idea behind CITIGROUP FDG INC and Northstar Clean Technologies 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.