Correlation Between Citigroup and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Citigroup and Ensign Energy 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 Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Ensign Energy Services, you can compare the effects of market volatilities on Citigroup and Ensign Energy 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 Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Ensign Energy.
Diversification Opportunities for Citigroup and Ensign Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Ensign is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ensign Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Energy Services 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 Ensign Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Energy Services has no effect on the direction of Citigroup i.e., Citigroup and Ensign Energy go up and down completely randomly.
Pair Corralation between Citigroup and Ensign Energy
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.94 times more return on investment than Ensign Energy. However, Citigroup is 1.06 times less risky than Ensign Energy. It trades about 0.21 of its potential returns per unit of risk. Ensign Energy Services is currently generating about 0.17 per unit of risk. If you would invest 6,412 in Citigroup on August 30, 2024 and sell it today you would earn a total of 604.00 from holding Citigroup or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Ensign Energy Services
Performance |
| Timeline |
| Citigroup |
| Ensign Energy Services |
Citigroup and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Ensign Energy
The main advantage of trading using opposite Citigroup and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Ensign Energy 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 Ensign Energy will offset losses from the drop in Ensign Energy's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Ensign Energy vs. Precision Drilling | Ensign Energy vs. Trican Well Service | Ensign Energy vs. Calfrac Well Services | Ensign Energy vs. NuVista Energy |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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