Correlation Between Citigroup and Houston Natural
Can any of the company-specific risk be diversified away by investing in both Citigroup and Houston Natural 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 Houston Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Houston Natural Resources, you can compare the effects of market volatilities on Citigroup and Houston Natural 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 Houston Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Houston Natural.
Diversification Opportunities for Citigroup and Houston Natural
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Houston is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Houston Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Houston Natural 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 Houston Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Houston Natural Resources has no effect on the direction of Citigroup i.e., Citigroup and Houston Natural go up and down completely randomly.
Pair Corralation between Citigroup and Houston Natural
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.71 times less return on investment than Houston Natural. But when comparing it to its historical volatility, Citigroup is 10.2 times less risky than Houston Natural. It trades about 0.26 of its potential returns per unit of risk. Houston Natural Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2.05 in Houston Natural Resources on September 1, 2024 and sell it today you would lose (0.05) from holding Houston Natural Resources or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Houston Natural Resources
Performance |
| Timeline |
| Citigroup |
| Houston Natural Resources |
Citigroup and Houston Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Houston Natural
The main advantage of trading using opposite Citigroup and Houston Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Houston Natural 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 Houston Natural will offset losses from the drop in Houston Natural's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Houston Natural vs. Ecoloclean Industrs | Houston Natural vs. JPX Global | Houston Natural vs. Majic Wheels Corp | Houston Natural vs. BluMetric Environmental |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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