Correlation Between HP and CITIGROUP

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Can any of the company-specific risk be diversified away by investing in both HP and CITIGROUP 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 HP and CITIGROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and CITIGROUP INC 465, you can compare the effects of market volatilities on HP and CITIGROUP 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 HP with a short position of CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and CITIGROUP.

Diversification Opportunities for HP and CITIGROUP

-0.7
  Correlation Coefficient
 HP

Excellent diversification

The 3 months correlation between HP and CITIGROUP is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and CITIGROUP INC 465 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC 465 and HP 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 HP Inc are associated (or correlated) with CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP INC 465 has no effect on the direction of HP i.e., HP and CITIGROUP go up and down completely randomly.

Pair Corralation between HP and CITIGROUP

Considering the 90-day investment horizon HP Inc is expected to generate 2.75 times more return on investment than CITIGROUP. However, HP is 2.75 times more volatile than CITIGROUP INC 465. It trades about 0.01 of its potential returns per unit of risk. CITIGROUP INC 465 is currently generating about -0.11 per unit of risk. If you would invest  3,560  in HP Inc on September 3, 2024 and sell it today you would lose (17.00) from holding HP Inc or give up 0.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

HP Inc  vs.  CITIGROUP INC 465

 Performance 
       Timeline  
HP Inc 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
CITIGROUP INC 465 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CITIGROUP INC 465 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITIGROUP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HP and CITIGROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and CITIGROUP

The main advantage of trading using opposite HP and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, CITIGROUP 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 CITIGROUP will offset losses from the drop in CITIGROUP's long position.
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The idea behind HP Inc and CITIGROUP INC 465 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 CEOs Directory module to screen CEOs from public companies around the world.

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