Correlation Between Citigroup and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both Citigroup and Nabors 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 Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Nabors Energy Transition, you can compare the effects of market volatilities on Citigroup and Nabors 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 Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Nabors Energy.
Diversification Opportunities for Citigroup and Nabors Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Nabors is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition 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 Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of Citigroup i.e., Citigroup and Nabors Energy go up and down completely randomly.
Pair Corralation between Citigroup and Nabors Energy
Taking into account the 90-day investment horizon Citigroup is expected to generate 9.89 times less return on investment than Nabors Energy. But when comparing it to its historical volatility, Citigroup is 7.46 times less risky than Nabors Energy. It trades about 0.05 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Nabors Energy Transition on January 10, 2025 and sell it today you would earn a total of 16.00 from holding Nabors Energy Transition or generate 69.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 59.49% |
| Values | Daily Returns |
Citigroup vs. Nabors Energy Transition
Performance |
| Timeline |
| Citigroup |
| Nabors Energy Transition |
Citigroup and Nabors Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Nabors Energy
The main advantage of trading using opposite Citigroup and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Nabors 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 Nabors Energy will offset losses from the drop in Nabors Energy's long position.| Citigroup vs. Barclays PLC ADR | Citigroup vs. ING Group NV | Citigroup vs. Banco Santander SA | Citigroup vs. HSBC Holdings PLC |
| Nabors Energy vs. Webus International Limited | Nabors Energy vs. Kaltura | Nabors Energy vs. FARO Technologies | Nabors Energy vs. HUTCHMED DRC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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