Correlation Between Citigroup and Zeo Energy

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

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

Diversification Opportunities for Citigroup and Zeo Energy

0.69

Correlation Coefficient

Citigroup  Zeo Energy

Poor diversification

The 3 months correlation between Citigroup and Zeo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Zeo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeo Energy Corp 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 Zeo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeo Energy Corp has no effect on the direction of Citigroup i.e., Citigroup and Zeo Energy go up and down completely randomly.

Pair Corralation between Citigroup and Zeo Energy

Taking into account the 90-day investment horizon Citigroup is expected to generate 59.07 times less return on investment than Zeo Energy. But when comparing it to its historical volatility, Citigroup is 11.73 times less risky than Zeo Energy. It trades about 0.04 of its potential returns per unit of risk. Zeo Energy Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3.57  in Zeo Energy Corp on December 19, 2024 and sell it today you would earn a total of  4.91  from holding Zeo Energy Corp or generate 137.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.97%
Values	Daily Returns

Citigroup  vs.  Zeo Energy Corp

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Zeo Energy Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zeo Energy Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Zeo Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Zeo Energy

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

The idea behind Citigroup and Zeo Energy Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.