Correlation Between Citigroup and Rithm Capital

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

By analyzing existing cross correlation between Citigroup and Rithm Capital Corp, you can compare the effects of market volatilities on Citigroup and Rithm Capital 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 Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Rithm Capital.

Diversification Opportunities for Citigroup and Rithm Capital

0.12

Correlation Coefficient

Citigroup  Rithm Capital

Average diversification

The 3 months correlation between Citigroup and Rithm is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp 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 Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of Citigroup i.e., Citigroup and Rithm Capital go up and down completely randomly.

Pair Corralation between Citigroup and Rithm Capital

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.4 times less return on investment than Rithm Capital. In addition to that, Citigroup is 7.81 times more volatile than Rithm Capital Corp. It trades about 0.01 of its total potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.16 per unit of volatility. If you would invest  2,430  in Rithm Capital Corp on December 29, 2024 and sell it today you would earn a total of  62.00  from holding Rithm Capital Corp or generate 2.55% return on investment over 90 days.

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

Citigroup  vs.  Rithm Capital Corp

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Rithm Capital Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rithm Capital Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Rithm Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Rithm Capital

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

The idea behind Citigroup and Rithm Capital Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.