Correlation Between City National and Short Oil

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

By analyzing existing cross correlation between City National Rochdale and Short Oil Gas, you can compare the effects of market volatilities on City National and Short Oil 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 City National with a short position of Short Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Short Oil.

Diversification Opportunities for City National and Short Oil

-0.42

Correlation Coefficient

City National  Short Oil

Very good diversification

The 3 months correlation between City and Short is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas and City National 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 City National Rochdale are associated (or correlated) with Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of City National i.e., City National and Short Oil go up and down completely randomly.

Pair Corralation between City National and Short Oil

Assuming the 90 days horizon City National Rochdale is expected to under-perform the Short Oil. In addition to that, City National is 2.17 times more volatile than Short Oil Gas. It trades about -0.26 of its total potential returns per unit of risk. Short Oil Gas is currently generating about -0.03 per unit of volatility. If you would invest  1,422  in Short Oil Gas on October 10, 2024 and sell it today you would lose (15.00) from holding Short Oil Gas or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

City National Rochdale  vs.  Short Oil Gas

City National Rochdale

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days City National Rochdale has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Short Oil Gas

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Short Oil Gas are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with City National and Short Oil

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

The idea behind City National Rochdale and Short Oil Gas 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.