Correlation Between Citigroup and Super Energy

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

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

Diversification Opportunities for Citigroup and Super Energy

-0.86

Correlation Coefficient

Citigroup  Super Energy

Pay attention - limited upside

The 3 months correlation between Citigroup and Super is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Super Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Energy 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 Super Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Energy has no effect on the direction of Citigroup i.e., Citigroup and Super Energy go up and down completely randomly.

Pair Corralation between Citigroup and Super Energy

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.51 times more return on investment than Super Energy. However, Citigroup is 1.97 times less risky than Super Energy. It trades about 0.13 of its potential returns per unit of risk. Super Energy is currently generating about -0.19 per unit of risk. If you would invest  7,090  in Citigroup on December 2, 2024 and sell it today you would earn a total of  905.00  from holding Citigroup or generate 12.76% return on investment over 90 days.

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

Citigroup  vs.  Super Energy

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.

Super Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Super Energy 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Super Energy

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

The idea behind Citigroup and Super Energy 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.