Correlation Between Citigroup and PHX Energy
Can any of the company-specific risk be diversified away by investing in both Citigroup and PHX 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 PHX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and PHX Energy Services, you can compare the effects of market volatilities on Citigroup and PHX 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 PHX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and PHX Energy.
Diversification Opportunities for Citigroup and PHX Energy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and PHX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX 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 PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Citigroup i.e., Citigroup and PHX Energy go up and down completely randomly.
Pair Corralation between Citigroup and PHX Energy
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.96 times more return on investment than PHX Energy. However, Citigroup is 1.04 times less risky than PHX Energy. It trades about 0.07 of its potential returns per unit of risk. PHX Energy Services is currently generating about 0.06 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. PHX Energy Services
Performance |
| Timeline |
| Citigroup |
| PHX Energy Services |
Citigroup and PHX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and PHX Energy
The main advantage of trading using opposite Citigroup and PHX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, PHX 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 PHX Energy will offset losses from the drop in PHX Energy's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| PHX Energy vs. CES Energy Solutions | PHX Energy vs. Total Energy Services | PHX Energy vs. Western Energy Services |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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