Correlation Between Citigroup and ENTERPRISE

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Can any of the company-specific risk be diversified away by investing in both Citigroup and ENTERPRISE 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 ENTERPRISE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and ENTERPRISE PRODS OPER, you can compare the effects of market volatilities on Citigroup and ENTERPRISE 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 ENTERPRISE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ENTERPRISE.

Diversification Opportunities for Citigroup and ENTERPRISE

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citigroup and ENTERPRISE is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ENTERPRISE PRODS OPER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERPRISE PRODS OPER 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 ENTERPRISE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERPRISE PRODS OPER has no effect on the direction of Citigroup i.e., Citigroup and ENTERPRISE go up and down completely randomly.

Pair Corralation between Citigroup and ENTERPRISE

Taking into account the 90-day investment horizon Citigroup is expected to generate 33.2 times less return on investment than ENTERPRISE. But when comparing it to its historical volatility, Citigroup is 39.92 times less risky than ENTERPRISE. It trades about 0.07 of its potential returns per unit of risk. ENTERPRISE PRODS OPER is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,413  in ENTERPRISE PRODS OPER on August 26, 2024 and sell it today you would earn a total of  502.00  from holding ENTERPRISE PRODS OPER or generate 5.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.17%
ValuesDaily Returns

Citigroup  vs.  ENTERPRISE PRODS OPER

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
ENTERPRISE PRODS OPER 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ENTERPRISE PRODS OPER are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ENTERPRISE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Citigroup and ENTERPRISE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and ENTERPRISE

The main advantage of trading using opposite Citigroup and ENTERPRISE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ENTERPRISE 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 ENTERPRISE will offset losses from the drop in ENTERPRISE's long position.
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The idea behind Citigroup and ENTERPRISE PRODS OPER pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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