Correlation Between Citigroup and Tidewater
Can any of the company-specific risk be diversified away by investing in both Citigroup and Tidewater 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 Tidewater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Tidewater, you can compare the effects of market volatilities on Citigroup and Tidewater 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 Tidewater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tidewater.
Diversification Opportunities for Citigroup and Tidewater
Excellent diversification
The 3 months correlation between Citigroup and Tidewater is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tidewater in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidewater 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 Tidewater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidewater has no effect on the direction of Citigroup i.e., Citigroup and Tidewater go up and down completely randomly.
Pair Corralation between Citigroup and Tidewater
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.32 times less return on investment than Tidewater. But when comparing it to its historical volatility, Citigroup is 1.89 times less risky than Tidewater. It trades about 0.07 of its potential returns per unit of risk. Tidewater is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,181 in Tidewater on August 24, 2024 and sell it today you would earn a total of 2,171 from holding Tidewater or generate 68.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Tidewater
Performance |
| Timeline |
| Citigroup |
| Tidewater |
Citigroup and Tidewater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Tidewater
The main advantage of trading using opposite Citigroup and Tidewater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Tidewater 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 Tidewater will offset losses from the drop in Tidewater's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Tidewater vs. Weatherford International PLC | Tidewater vs. NOV Inc | Tidewater vs. Liberty Oilfield Services | Tidewater vs. TechnipFMC PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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