Correlation Between Citigroup and Rbc Funds

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

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

Diversification Opportunities for Citigroup and Rbc Funds

0.83

Correlation Coefficient

Citigroup  Rbc Funds

Very poor diversification

The 3 months correlation between Citigroup and Rbc is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rbc Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Funds Trust and Citigroup 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 Citigroup are associated (or correlated) with Rbc Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Funds Trust has no effect on the direction of Citigroup i.e., Citigroup and Rbc Funds go up and down completely randomly.

Pair Corralation between Citigroup and Rbc Funds

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Rbc Funds. In addition to that, Citigroup is 4.8 times more volatile than Rbc Funds Trust. It trades about -0.09 of its total potential returns per unit of risk. Rbc Funds Trust is currently generating about -0.04 per unit of volatility. If you would invest  1,009  in Rbc Funds Trust on September 24, 2024 and sell it today you would lose (2.00) from holding Rbc Funds Trust or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Rbc Funds Trust

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Rbc Funds Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Funds Trust are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rbc Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Rbc Funds

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

The idea behind Citigroup and Rbc Funds Trust 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.