Correlation Between Brookfield and Citadel Income

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

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

Diversification Opportunities for Brookfield and Citadel Income

0.36

Correlation Coefficient

Brookfield  Citadel Income

Weak diversification

The 3 months correlation between Brookfield and Citadel is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Citadel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citadel Income and Brookfield 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 Brookfield 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 Brookfield i.e., Brookfield and Citadel Income go up and down completely randomly.

Pair Corralation between Brookfield and Citadel Income

Assuming the 90 days trading horizon Brookfield is expected to generate 9.36 times less return on investment than Citadel Income. But when comparing it to its historical volatility, Brookfield is 2.79 times less risky than Citadel Income. It trades about 0.05 of its potential returns per unit of risk. Citadel Income is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  245.00  in Citadel Income on December 1, 2024 and sell it today you would earn a total of  40.00  from holding Citadel Income or generate 16.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Brookfield  vs.  Citadel Income

Brookfield

Risk-Adjusted Performance

Insignificant

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

Citadel Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citadel Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citadel Income sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield and Citadel Income

The main advantage of trading using opposite Brookfield and Citadel Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield 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 Brookfield 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.