Correlation Between Citigroup and Entergy New

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

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

Diversification Opportunities for Citigroup and Entergy New

0.31

Correlation Coefficient

Citigroup  Entergy New

Weak diversification

The 3 months correlation between Citigroup and Entergy is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Entergy New Orleans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy New Orleans 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 Entergy New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy New Orleans has no effect on the direction of Citigroup i.e., Citigroup and Entergy New go up and down completely randomly.

Pair Corralation between Citigroup and Entergy New

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.15 times more return on investment than Entergy New. However, Citigroup is 2.15 times more volatile than Entergy New Orleans. It trades about 0.03 of its potential returns per unit of risk. Entergy New Orleans is currently generating about 0.03 per unit of risk. If you would invest  6,991  in Citigroup on December 29, 2024 and sell it today you would earn a total of  194.00  from holding Citigroup or generate 2.77% return on investment over 90 days.

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

Citigroup  vs.  Entergy New Orleans

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.

Entergy New Orleans

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entergy New Orleans are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Entergy New is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Citigroup and Entergy New

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

The idea behind Citigroup and Entergy New Orleans 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.