Correlation Between CDSPI Petite and Citadel Income

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

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

Diversification Opportunities for CDSPI Petite and Citadel Income

-0.34

Correlation Coefficient

CDSPI Petite  Citadel Income

Very good diversification

The 3 months correlation between CDSPI and Citadel is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CDSPI petite cap and Citadel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citadel Income and CDSPI Petite 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 CDSPI petite cap are associated (or correlated) with Citadel Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citadel Income has no effect on the direction of CDSPI Petite i.e., CDSPI Petite and Citadel Income go up and down completely randomly.

Pair Corralation between CDSPI Petite and Citadel Income

Assuming the 90 days trading horizon CDSPI petite cap is expected to under-perform the Citadel Income. But the fund apears to be less risky and, when comparing its historical volatility, CDSPI petite cap is 1.95 times less risky than Citadel Income. The fund trades about -0.09 of its potential returns per unit of risk. The Citadel Income is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  248.00  in Citadel Income on December 25, 2024 and sell it today you would earn a total of  27.00  from holding Citadel Income or generate 10.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

CDSPI petite cap  vs.  Citadel Income

CDSPI petite cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDSPI petite cap has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CDSPI Petite is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citadel Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citadel Income are ranked lower than 7 (%) 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 April 2025.

Pair Trading with CDSPI Petite and Citadel Income

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

The idea behind CDSPI petite cap and Citadel Income 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 Managers module to screen money managers from public funds and ETFs managed around the world.