Correlation Between Citigroup and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Citigroup and Equinor ASA 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 Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Equinor ASA, you can compare the effects of market volatilities on Citigroup and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Equinor ASA.
Diversification Opportunities for Citigroup and Equinor ASA
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Equinor is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Citigroup i.e., Citigroup and Equinor ASA go up and down completely randomly.
Pair Corralation between Citigroup and Equinor ASA
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Equinor ASA. However, Citigroup is 1.47 times less risky than Equinor ASA. It trades about -0.04 of its potential returns per unit of risk. Equinor ASA is currently generating about -0.1 per unit of risk. If you would invest 6,900 in Citigroup on September 19, 2024 and sell it today you would lose (88.00) from holding Citigroup or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Equinor ASA
Performance |
| Timeline |
| Citigroup |
| Equinor ASA |
Citigroup and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Equinor ASA
The main advantage of trading using opposite Citigroup and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Equinor ASA vs. NXP Semiconductors NV | Equinor ASA vs. AGRICULTBK HADR25 YC | Equinor ASA vs. Granite Construction | Equinor ASA vs. Australian Agricultural |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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