Correlation Between Citigroup and Nexa Resources

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

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

Diversification Opportunities for Citigroup and Nexa Resources

-0.15

Correlation Coefficient

Citigroup  Nexa Resources

Good diversification

The 3 months correlation between Citigroup and Nexa is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nexa Resources Peru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources Peru 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 Nexa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexa Resources Peru has no effect on the direction of Citigroup i.e., Citigroup and Nexa Resources go up and down completely randomly.

Pair Corralation between Citigroup and Nexa Resources

Assuming the 90 days horizon Citigroup is expected to generate 2.82 times more return on investment than Nexa Resources. However, Citigroup is 2.82 times more volatile than Nexa Resources Peru. It trades about 0.41 of its potential returns per unit of risk. Nexa Resources Peru is currently generating about 0.04 per unit of risk. If you would invest  7,008  in Citigroup on May 2, 2025 and sell it today you would earn a total of  2,402  from holding Citigroup or generate 34.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.34%
Values	Daily Returns

Citigroup  vs.  Nexa Resources Peru

Citigroup

Risk-Adjusted Performance

Very Strong

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady forward indicators, Citigroup displayed solid returns over the last few months and may actually be approaching a breakup point.

Nexa Resources Peru

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nexa Resources Peru are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Nexa Resources is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Nexa Resources

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

The idea behind Citigroup and Nexa Resources Peru 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.