Correlation Between NVIDIA and Citigroup
Can any of the company-specific risk be diversified away by investing in both NVIDIA and Citigroup 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 NVIDIA and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and Citigroup, you can compare the effects of market volatilities on NVIDIA and Citigroup 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 NVIDIA with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Citigroup.
Diversification Opportunities for NVIDIA and Citigroup
Very poor diversification
The 3 months correlation between NVIDIA and Citigroup is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and NVIDIA 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 NVIDIA are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of NVIDIA i.e., NVIDIA and Citigroup go up and down completely randomly.
Pair Corralation between NVIDIA and Citigroup
Given the investment horizon of 90 days NVIDIA is expected to generate 2.46 times more return on investment than Citigroup. However, NVIDIA is 2.46 times more volatile than Citigroup. It trades about 0.14 of its potential returns per unit of risk. Citigroup is currently generating about 0.19 per unit of risk. If you would invest 61,028 in NVIDIA on January 26, 2024 and sell it today you would earn a total of 18,649 from holding NVIDIA or generate 30.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
NVIDIA vs. Citigroup
Performance |
Timeline |
NVIDIA |
Citigroup |
NVIDIA and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NVIDIA and Citigroup
The main advantage of trading using opposite NVIDIA and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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