Correlation Between Citigroup and PHX Minerals

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

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

Diversification Opportunities for Citigroup and PHX Minerals

-0.65

Correlation Coefficient

Citigroup  PHX Minerals

Excellent diversification

The 3 months correlation between Citigroup and PHX is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PHX Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Minerals 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 Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Minerals has no effect on the direction of Citigroup i.e., Citigroup and PHX Minerals go up and down completely randomly.

Pair Corralation between Citigroup and PHX Minerals

Taking into account the 90-day investment horizon Citigroup is expected to generate 8.19 times more return on investment than PHX Minerals. However, Citigroup is 8.19 times more volatile than PHX Minerals. It trades about 0.26 of its potential returns per unit of risk. PHX Minerals is currently generating about 0.31 per unit of risk. If you would invest  7,563  in Citigroup on May 17, 2025 and sell it today you would earn a total of  1,983  from holding Citigroup or generate 26.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	40.32%
Values	Daily Returns

Citigroup  vs.  PHX Minerals

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.

PHX Minerals

Risk-Adjusted Performance

Solid

Over the last 90 days PHX Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, PHX Minerals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and PHX Minerals

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

The idea behind Citigroup and PHX Minerals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.