Correlation Between Citigroup and PENINSULA ENERG

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

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

Diversification Opportunities for Citigroup and PENINSULA ENERG

-0.77

Correlation Coefficient

Citigroup  PENINSULA ENERG

Pay attention - limited upside

The 3 months correlation between Citigroup and PENINSULA is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PENINSULA ENERG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENINSULA ENERG 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 PENINSULA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENINSULA ENERG has no effect on the direction of Citigroup i.e., Citigroup and PENINSULA ENERG go up and down completely randomly.

Pair Corralation between Citigroup and PENINSULA ENERG

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the PENINSULA ENERG. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 4.31 times less risky than PENINSULA ENERG. The stock trades about -0.06 of its potential returns per unit of risk. The PENINSULA ENERG is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  64.00  in PENINSULA ENERG on October 7, 2024 and sell it today you would earn a total of  22.00  from holding PENINSULA ENERG or generate 34.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

Citigroup  vs.  PENINSULA ENERG

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

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Citigroup and PENINSULA ENERG

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

The idea behind Citigroup and PENINSULA ENERG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.