Correlation Between Citadel Income and IShares SPTSX

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

By analyzing existing cross correlation between Citadel Income and iShares SPTSX Capped, you can compare the effects of market volatilities on Citadel Income and IShares SPTSX 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 Citadel Income with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citadel Income and IShares SPTSX.

Diversification Opportunities for Citadel Income and IShares SPTSX

0.03

Correlation Coefficient

Citadel Income  IShares SPTSX

Significant diversification

The 3 months correlation between Citadel and IShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citadel Income and iShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Capped and Citadel Income 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 Citadel Income are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Capped has no effect on the direction of Citadel Income i.e., Citadel Income and IShares SPTSX go up and down completely randomly.

Pair Corralation between Citadel Income and IShares SPTSX

Assuming the 90 days trading horizon Citadel Income is expected to generate 1.2 times more return on investment than IShares SPTSX. However, Citadel Income is 1.2 times more volatile than iShares SPTSX Capped. It trades about 0.06 of its potential returns per unit of risk. iShares SPTSX Capped is currently generating about -0.03 per unit of risk. If you would invest  245.00  in Citadel Income on September 22, 2024 and sell it today you would earn a total of  15.00  from holding Citadel Income or generate 6.12% return on investment over 90 days.

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

Citadel Income  vs.  iShares SPTSX Capped

Citadel Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citadel Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citadel Income may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares SPTSX Capped

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares SPTSX Capped has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, IShares SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citadel Income and IShares SPTSX

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

The idea behind Citadel Income and iShares SPTSX Capped 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.