Correlation Between CITIGROUP CDR and NorthWest Healthcare

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

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

Diversification Opportunities for CITIGROUP CDR and NorthWest Healthcare

0.65

Correlation Coefficient

CITIGROUP CDR  NorthWest Healthcare

Poor diversification

The 3 months correlation between CITIGROUP and NorthWest is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CITIGROUP CDR and NorthWest Healthcare Propertie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWest Healthcare 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 NorthWest Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWest Healthcare has no effect on the direction of CITIGROUP CDR i.e., CITIGROUP CDR and NorthWest Healthcare go up and down completely randomly.

Pair Corralation between CITIGROUP CDR and NorthWest Healthcare

Assuming the 90 days trading horizon CITIGROUP CDR is expected to generate 1.5 times more return on investment than NorthWest Healthcare. However, CITIGROUP CDR is 1.5 times more volatile than NorthWest Healthcare Properties. It trades about 0.39 of its potential returns per unit of risk. NorthWest Healthcare Properties is currently generating about 0.05 per unit of risk. If you would invest  2,699  in CITIGROUP CDR on April 22, 2025 and sell it today you would earn a total of  1,217  from holding CITIGROUP CDR or generate 45.09% return on investment over 90 days.

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

CITIGROUP CDR  vs.  NorthWest Healthcare Propertie

CITIGROUP CDR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 30 (%) 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.

NorthWest Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NorthWest Healthcare Properties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, NorthWest Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CITIGROUP CDR and NorthWest Healthcare

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

The idea behind CITIGROUP CDR and NorthWest Healthcare Properties 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.