Correlation Between Citigroup and Halliburton

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Halliburton 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 Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Halliburton, you can compare the effects of market volatilities on Citigroup and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Halliburton.

Diversification Opportunities for Citigroup and Halliburton

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Citigroup and Halliburton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Citigroup i.e., Citigroup and Halliburton go up and down completely randomly.

Pair Corralation between Citigroup and Halliburton

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.56 times more return on investment than Halliburton. However, Citigroup is 1.79 times less risky than Halliburton. It trades about -0.22 of its potential returns per unit of risk. Halliburton is currently generating about -0.43 per unit of risk. If you would invest  5,140  in Citigroup on April 7, 2022 and sell it today you would lose (525.00)  from holding Citigroup or give up 10.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Halliburton

 Performance (%) 
      Timeline 
Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Citigroup is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Citigroup Price Channel

Halliburton 
Halliburton Performance
0 of 100
Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in August 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0153
Payout Ratio
0.26
Last Split Factor
2:1
Forward Annual Dividend Rate
0.48
Dividend Date
2022-06-22
Ex Dividend Date
2022-05-31
Last Split Date
2006-07-17

Halliburton Price Channel

Citigroup and Halliburton Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Citigroup and Halliburton

The main advantage of trading using opposite Citigroup and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.
The idea behind Citigroup and Halliburton 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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