Correlation Between RBC Global and Citadel Income

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

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

Diversification Opportunities for RBC Global and Citadel Income

0.63

Correlation Coefficient

RBC Global  Citadel Income

Poor diversification

The 3 months correlation between RBC and Citadel is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding RBC Global Equity and Citadel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citadel Income and RBC Global 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 RBC Global Equity 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 RBC Global i.e., RBC Global and Citadel Income go up and down completely randomly.

Pair Corralation between RBC Global and Citadel Income

Assuming the 90 days trading horizon RBC Global Equity is expected to generate 0.41 times more return on investment than Citadel Income. However, RBC Global Equity is 2.47 times less risky than Citadel Income. It trades about 0.16 of its potential returns per unit of risk. Citadel Income is currently generating about -0.01 per unit of risk. If you would invest  2,174  in RBC Global Equity on September 2, 2024 and sell it today you would earn a total of  627.00  from holding RBC Global Equity or generate 28.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

RBC Global Equity  vs.  Citadel Income

RBC Global Equity

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Global Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat fragile basic indicators, RBC Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Citadel Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citadel Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, Citadel Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RBC Global and Citadel Income

The main advantage of trading using opposite RBC Global and Citadel Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Global 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 RBC Global Equity 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.