Correlation Between CITIGROUP and Black Hills

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

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

Diversification Opportunities for CITIGROUP and Black Hills

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Correlation Coefficient

CITIGROUP  Black Hills

Pay attention - limited upside

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

Pair Corralation between CITIGROUP and Black Hills

Assuming the 90 days trading horizon CITIGROUP INC is expected to under-perform the Black Hills. But the bond apears to be less risky and, when comparing its historical volatility, CITIGROUP INC is 1.13 times less risky than Black Hills. The bond trades about -0.12 of its potential returns per unit of risk. The Black Hills is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,052  in Black Hills on September 17, 2024 and sell it today you would earn a total of  44.00  from holding Black Hills or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

CITIGROUP INC  vs.  Black Hills

CITIGROUP INC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days CITIGROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CITIGROUP INC investors.

Black Hills

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CITIGROUP and Black Hills

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

The idea behind CITIGROUP INC and Black Hills 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.