Correlation Between Citigroup and Nabors Industries

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

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

Diversification Opportunities for Citigroup and Nabors Industries

-0.42

Correlation Coefficient

Citigroup  Nabors Industries

Very good diversification

The 3 months correlation between Citigroup and Nabors is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries 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 Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Citigroup i.e., Citigroup and Nabors Industries go up and down completely randomly.

Pair Corralation between Citigroup and Nabors Industries

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.25 times more return on investment than Nabors Industries. However, Citigroup is 4.05 times less risky than Nabors Industries. It trades about 0.09 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.02 per unit of risk. If you would invest  4,378  in Citigroup on October 3, 2024 and sell it today you would earn a total of  2,661  from holding Citigroup or generate 60.78% return on investment over 90 days.

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

Citigroup  vs.  Nabors Industries

Citigroup

Risk-Adjusted Performance

10 of 100

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 unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nabors Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citigroup and Nabors Industries

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

The idea behind Citigroup and Nabors Industries 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.