Correlation Between Citigroup and Nestlé SA
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nestlé 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 Nestlé SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nestl SA, you can compare the effects of market volatilities on Citigroup and Nestlé 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 Nestlé SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nestlé SA.
Diversification Opportunities for Citigroup and Nestlé SA
Pay attention - limited upside
The 3 months correlation between Citigroup and Nestlé is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestlé 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 Nestlé SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestlé SA has no effect on the direction of Citigroup i.e., Citigroup and Nestlé SA go up and down completely randomly.
Pair Corralation between Citigroup and Nestlé SA
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.36 times more return on investment than Nestlé SA. However, Citigroup is 1.36 times more volatile than Nestl SA. It trades about 0.39 of its potential returns per unit of risk. Nestl SA is currently generating about -0.1 per unit of risk. If you would invest 6,789 in Citigroup on April 25, 2025 and sell it today you would earn a total of 2,810 from holding Citigroup or generate 41.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 96.83% |
Values | Daily Returns |
Citigroup vs. Nestl SA
Performance |
Timeline |
Citigroup |
Nestlé SA |
Citigroup and Nestlé SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Nestlé SA
The main advantage of trading using opposite Citigroup and Nestlé SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nestlé 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 Nestlé SA will offset losses from the drop in Nestlé SA's long position.Citigroup vs. Bank of America | Citigroup vs. Wells Fargo | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Toronto Dominion Bank |
Nestlé SA vs. Tower One Wireless | Nestlé SA vs. Singapore Telecommunications Limited | Nestlé SA vs. INTER CARS SA | Nestlé SA vs. Citic Telecom International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |