Correlation Between Citigroup and EOG Resources
Can any of the company-specific risk be diversified away by investing in both Citigroup and EOG Resources 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 EOG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and EOG Resources, you can compare the effects of market volatilities on Citigroup and EOG Resources 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 EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and EOG Resources.
Diversification Opportunities for Citigroup and EOG Resources
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and EOG is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources 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 EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of Citigroup i.e., Citigroup and EOG Resources go up and down completely randomly.
Pair Corralation between Citigroup and EOG Resources
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.06 times more return on investment than EOG Resources. However, Citigroup is 1.06 times more volatile than EOG Resources. It trades about 0.11 of its potential returns per unit of risk. EOG Resources is currently generating about 0.06 per unit of risk. If you would invest 4,553 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,431 from holding Citigroup or generate 53.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.8% |
| Values | Daily Returns |
Citigroup vs. EOG Resources
Performance |
| Timeline |
| Citigroup |
| EOG Resources |
Citigroup and EOG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and EOG Resources
The main advantage of trading using opposite Citigroup and EOG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, EOG Resources 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 EOG Resources will offset losses from the drop in EOG Resources' long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| EOG Resources vs. Canadian Natural Resources | EOG Resources vs. Pioneer Natural Resources | EOG Resources vs. Woodside Energy Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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