Correlation Between CITIGROUP CDR and NVIDIA CDR

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

By analyzing existing cross correlation between CITIGROUP CDR and NVIDIA CDR, you can compare the effects of market volatilities on CITIGROUP CDR and NVIDIA CDR 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 CDR with a short position of NVIDIA CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIGROUP CDR and NVIDIA CDR.

Diversification Opportunities for CITIGROUP CDR and NVIDIA CDR

0.97

Correlation Coefficient

CITIGROUP CDR  NVIDIA CDR

Almost no diversification

The 3 months correlation between CITIGROUP and NVIDIA is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding CITIGROUP CDR and NVIDIA CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA CDR and CITIGROUP CDR 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 CDR are associated (or correlated) with NVIDIA CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA CDR has no effect on the direction of CITIGROUP CDR i.e., CITIGROUP CDR and NVIDIA CDR go up and down completely randomly.

Pair Corralation between CITIGROUP CDR and NVIDIA CDR

Assuming the 90 days trading horizon CITIGROUP CDR is expected to generate 1.42 times less return on investment than NVIDIA CDR. But when comparing it to its historical volatility, CITIGROUP CDR is 1.18 times less risky than NVIDIA CDR. It trades about 0.42 of its potential returns per unit of risk. NVIDIA CDR is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest  2,239  in NVIDIA CDR on April 20, 2025 and sell it today you would earn a total of  1,720  from holding NVIDIA CDR or generate 76.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CITIGROUP CDR  vs.  NVIDIA CDR

CITIGROUP CDR

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, CITIGROUP CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

NVIDIA CDR

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, NVIDIA CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIGROUP CDR and NVIDIA CDR

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

The idea behind CITIGROUP CDR and NVIDIA CDR 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.