Correlation Between Citigroup and Stamper Oil

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

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

Diversification Opportunities for Citigroup and Stamper Oil

-0.45

Correlation Coefficient

Citigroup  Stamper Oil

Very good diversification

The 3 months correlation between Citigroup and Stamper is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Stamper Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stamper 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 Stamper Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stamper Oil Gas has no effect on the direction of Citigroup i.e., Citigroup and Stamper Oil go up and down completely randomly.

Pair Corralation between Citigroup and Stamper Oil

Taking into account the 90-day investment horizon Citigroup is expected to generate 17.13 times less return on investment than Stamper Oil. But when comparing it to its historical volatility, Citigroup is 27.17 times less risky than Stamper Oil. It trades about 0.11 of its potential returns per unit of risk. Stamper Oil Gas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8.17  in Stamper Oil Gas on September 23, 2024 and sell it today you would lose (7.17) from holding Stamper Oil Gas or give up 87.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

Citigroup  vs.  Stamper Oil Gas

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Stamper Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Citigroup and Stamper 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.