Correlation Between Citigroup and Powertap Hydrogen

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

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

Diversification Opportunities for Citigroup and Powertap Hydrogen

0.0

Correlation Coefficient

Citigroup  Powertap Hydrogen

Pay attention - limited upside

The 3 months correlation between Citigroup and Powertap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Powertap Hydrogen Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertap Hydrogen Capital 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 Powertap Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertap Hydrogen Capital has no effect on the direction of Citigroup i.e., Citigroup and Powertap Hydrogen go up and down completely randomly.

Pair Corralation between Citigroup and Powertap Hydrogen

Taking into account the 90-day investment horizon Citigroup is expected to generate 47.18 times less return on investment than Powertap Hydrogen. But when comparing it to its historical volatility, Citigroup is 43.21 times less risky than Powertap Hydrogen. It trades about 0.09 of its potential returns per unit of risk. Powertap Hydrogen Capital is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Powertap Hydrogen Capital on December 2, 2024 and sell it today you would lose (79.99) from holding Powertap Hydrogen Capital or give up 99.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	74.95%
Values	Daily Returns

Citigroup  vs.  Powertap Hydrogen Capital

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Powertap Hydrogen Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powertap Hydrogen Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Powertap Hydrogen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Powertap Hydrogen

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

The idea behind Citigroup and Powertap Hydrogen Capital 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.