Correlation Between Citigroup and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both Citigroup and Marathon Petroleum 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 Marathon Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Marathon Petroleum, you can compare the effects of market volatilities on Citigroup and Marathon Petroleum 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 Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Marathon Petroleum.
Diversification Opportunities for Citigroup and Marathon Petroleum
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Marathon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum 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 Marathon Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Petroleum has no effect on the direction of Citigroup i.e., Citigroup and Marathon Petroleum go up and down completely randomly.
Pair Corralation between Citigroup and Marathon Petroleum
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times more return on investment than Marathon Petroleum. However, Citigroup is 1.17 times more volatile than Marathon Petroleum. It trades about 0.2 of its potential returns per unit of risk. Marathon Petroleum is currently generating about 0.22 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Marathon Petroleum
Performance |
| Timeline |
| Citigroup |
| Marathon Petroleum |
Citigroup and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Marathon Petroleum
The main advantage of trading using opposite Citigroup and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Marathon Petroleum 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 Marathon Petroleum will offset losses from the drop in Marathon Petroleum's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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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