Correlation Between Citigroup and EQUINOR ASA

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

Diversification Opportunities for Citigroup and EQUINOR ASA

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Citigroup and EQUINOR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and EQUINOR ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUINOR ASA 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 EQUINOR ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUINOR ASA has no effect on the direction of Citigroup i.e., Citigroup and EQUINOR ASA go up and down completely randomly.

Pair Corralation between Citigroup and EQUINOR ASA

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the EQUINOR ASA. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.37 times less risky than EQUINOR ASA. The stock trades about -0.26 of its potential returns per unit of risk. The EQUINOR ASA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,521  in EQUINOR ASA on March 27, 2022 and sell it today you would lose (146.00)  from holding EQUINOR ASA or give up 4.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  EQUINOR ASA

 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 weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0439
Payout Ratio
0.24
Last Split Factor
1:10
Forward Annual Dividend Rate
2.04
Dividend Date
2022-05-27
Ex Dividend Date
2022-04-29
Last Split Date
2011-05-09

Citigroup Price Channel

EQUINOR ASA 
EQUINOR Performance
0 of 100
Over the last 90 days EQUINOR ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, EQUINOR ASA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0233
Payout Ratio
0.5
Forward Annual Dividend Rate
0.8
Ex Dividend Date
2022-08-11

EQUINOR Price Channel

Citigroup and EQUINOR ASA Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Citigroup and EQUINOR ASA

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

EQUINOR ASA

Pair trading matchups for EQUINOR ASA

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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