Correlation Between Citigroup and Harbour Energy

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

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

Diversification Opportunities for Citigroup and Harbour Energy

-0.74

Correlation Coefficient

Citigroup  Harbour Energy

Pay attention - limited upside

The 3 months correlation between Citigroup and Harbour is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Harbour Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbour Energy PLC 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 Harbour Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbour Energy PLC has no effect on the direction of Citigroup i.e., Citigroup and Harbour Energy go up and down completely randomly.

Pair Corralation between Citigroup and Harbour Energy

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.51 times more return on investment than Harbour Energy. However, Citigroup is 1.98 times less risky than Harbour Energy. It trades about 0.08 of its potential returns per unit of risk. Harbour Energy PLC is currently generating about 0.01 per unit of risk. If you would invest  5,305  in Citigroup on October 2, 2024 and sell it today you would earn a total of  1,734  from holding Citigroup or generate 32.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.56%
Values	Daily Returns

Citigroup  vs.  Harbour Energy PLC

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Harbour Energy PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbour Energy PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Harbour Energy

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

The idea behind Citigroup and Harbour Energy PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.