Correlation Between Citizens and 81619PAA5

Can any of the company-specific risk be diversified away by investing in both Citizens and 81619PAA5 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 Citizens and 81619PAA5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citizens and US81619PAA57, you can compare the effects of market volatilities on Citizens and 81619PAA5 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 Citizens with a short position of 81619PAA5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and 81619PAA5.

Diversification Opportunities for Citizens and 81619PAA5

0.37

Correlation Coefficient

Citizens  81619PAA5

Weak diversification

The 3 months correlation between Citizens and 81619PAA5 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and US81619PAA57 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US81619PAA57 and Citizens 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 Citizens are associated (or correlated) with 81619PAA5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US81619PAA57 has no effect on the direction of Citizens i.e., Citizens and 81619PAA5 go up and down completely randomly.

Pair Corralation between Citizens and 81619PAA5

Considering the 90-day investment horizon Citizens is expected to generate 1.8 times more return on investment than 81619PAA5. However, Citizens is 1.8 times more volatile than US81619PAA57. It trades about 0.11 of its potential returns per unit of risk. US81619PAA57 is currently generating about -0.04 per unit of risk. If you would invest  306.00  in Citizens on September 12, 2024 and sell it today you would earn a total of  98.50  from holding Citizens or generate 32.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.94%
Values	Daily Returns

Citizens  vs.  US81619PAA57

Citizens

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, Citizens sustained solid returns over the last few months and may actually be approaching a breakup point.

US81619PAA57

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US81619PAA57 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US81619PAA57 investors.

Pair Trading with Citizens and 81619PAA5

The main advantage of trading using opposite Citizens and 81619PAA5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, 81619PAA5 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 81619PAA5 will offset losses from the drop in 81619PAA5's long position.

The idea behind Citizens and US81619PAA57 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.