Correlation Between Citigroup and Zion Oil

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

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

Diversification Opportunities for Citigroup and Zion Oil

0.0

Correlation Coefficient

Citigroup  Zion Oil

Pay attention - limited upside

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

Pair Corralation between Citigroup and Zion Oil

If you would invest  5,960  in Citigroup on December 5, 2024 and sell it today you would earn a total of  1,233  from holding Citigroup or generate 20.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Zion Oil Gas

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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.

Zion Oil Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zion Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zion Oil 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 Zion Oil

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

The idea behind Citigroup and Zion Oil Gas 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.