Correlation Between Citigroup and Antero Resources

Can any of the company-specific risk be diversified away by investing in both Citigroup and Antero Resources 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 Antero Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Antero Resources Corp, you can compare the effects of market volatilities on Citigroup and Antero Resources 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 Antero Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Antero Resources.

Diversification Opportunities for Citigroup and Antero Resources

0.54

Correlation Coefficient

Citigroup  Antero Resources

Very weak diversification

The 3 months correlation between Citigroup and Antero is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Antero Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Resources Corp 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 Antero Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Resources Corp has no effect on the direction of Citigroup i.e., Citigroup and Antero Resources go up and down completely randomly.

Pair Corralation between Citigroup and Antero Resources

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.23 times less return on investment than Antero Resources. But when comparing it to its historical volatility, Citigroup is 1.29 times less risky than Antero Resources. It trades about 0.03 of its potential returns per unit of risk. Antero Resources Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,552  in Antero Resources Corp on December 28, 2024 and sell it today you would earn a total of  401.00  from holding Antero Resources Corp or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Antero Resources Corp

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Antero Resources Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Antero Resources

The main advantage of trading using opposite Citigroup and Antero Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Antero Resources 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 Antero Resources will offset losses from the drop in Antero Resources' long position.

The idea behind Citigroup and Antero Resources Corp 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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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.