Correlation Between Citigroup and DHT Holdings

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

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

Diversification Opportunities for Citigroup and DHT Holdings

-0.37

Correlation Coefficient

Citigroup  DHT Holdings

Very good diversification

The 3 months correlation between Citigroup and DHT is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and DHT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHT Holdings 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 DHT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHT Holdings has no effect on the direction of Citigroup i.e., Citigroup and DHT Holdings go up and down completely randomly.

Pair Corralation between Citigroup and DHT Holdings

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.79 times more return on investment than DHT Holdings. However, Citigroup is 1.27 times less risky than DHT Holdings. It trades about 0.26 of its potential returns per unit of risk. DHT Holdings is currently generating about 0.04 per unit of risk. If you would invest  7,442  in Citigroup on May 11, 2025 and sell it today you would earn a total of  1,831  from holding Citigroup or generate 24.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  DHT Holdings

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

DHT Holdings

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in DHT Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, DHT Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and DHT Holdings

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

The idea behind Citigroup and DHT Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.