Correlation Between Citigroup and Oil Gas
Can any of the company-specific risk be diversified away by investing in both Citigroup and Oil Gas 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 Oil Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Oil Gas Ultrasector, you can compare the effects of market volatilities on Citigroup and Oil Gas 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 Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Oil Gas.
Diversification Opportunities for Citigroup and Oil Gas
Very poor diversification
The 3 months correlation between Citigroup and Oil is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector 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 Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Citigroup i.e., Citigroup and Oil Gas go up and down completely randomly.
Pair Corralation between Citigroup and Oil Gas
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.05 times more return on investment than Oil Gas. However, Citigroup is 1.05 times more volatile than Oil Gas Ultrasector. It trades about 0.09 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about 0.05 per unit of risk. If you would invest 5,476 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,611 from holding Citigroup or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Oil Gas Ultrasector
Performance |
| Timeline |
| Citigroup |
| Oil Gas Ultrasector |
Citigroup and Oil Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Oil Gas
The main advantage of trading using opposite Citigroup and Oil Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Oil Gas 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 Oil Gas will offset losses from the drop in Oil Gas' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector | Oil Gas vs. Basic Materials Ultrasector | Oil Gas vs. Utilities Ultrasector Profund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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