Correlation Between Citigroup and Exxon Mobil
Can any of the company-specific risk be diversified away by investing in both Citigroup and Exxon Mobil 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 Exxon Mobil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Exxon Mobil, you can compare the effects of market volatilities on Citigroup and Exxon Mobil 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 Exxon Mobil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Exxon Mobil.
Diversification Opportunities for Citigroup and Exxon Mobil
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Exxon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon Mobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of Citigroup i.e., Citigroup and Exxon Mobil go up and down completely randomly.
Pair Corralation between Citigroup and Exxon Mobil
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.47 times more return on investment than Exxon Mobil. However, Citigroup is 1.47 times more volatile than Exxon Mobil. It trades about 0.21 of its potential returns per unit of risk. Exxon Mobil is currently generating about 0.2 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
Citigroup vs. Exxon Mobil
Performance |
| Timeline |
| Citigroup |
| Exxon Mobil |
Citigroup and Exxon Mobil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Exxon Mobil
The main advantage of trading using opposite Citigroup and Exxon Mobil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Exxon Mobil 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 Exxon Mobil will offset losses from the drop in Exxon Mobil's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Exxon Mobil vs. Marvell Technology | Exxon Mobil vs. Raytheon Technologies | Exxon Mobil vs. Paycom Software | Exxon Mobil vs. HDFC Bank Limited |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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