Correlation Between Citigroup and PHX Energy

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

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

Diversification Opportunities for Citigroup and PHX Energy

0.6

Correlation Coefficient

Citigroup  PHX Energy

Poor diversification

The 3 months correlation between Citigroup and PHX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services 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 PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Citigroup i.e., Citigroup and PHX Energy go up and down completely randomly.

Pair Corralation between Citigroup and PHX Energy

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.94 times more return on investment than PHX Energy. However, Citigroup is 1.06 times less risky than PHX Energy. It trades about 0.38 of its potential returns per unit of risk. PHX Energy Services is currently generating about 0.08 per unit of risk. If you would invest  6,789  in Citigroup on April 25, 2025 and sell it today you would earn a total of  2,750  from holding Citigroup or generate 40.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  PHX Energy Services

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 29 (%) 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.

PHX Energy Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Energy Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, PHX Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Citigroup and PHX Energy

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

The idea behind Citigroup and PHX Energy Services 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.