Correlation Between Citadel Income and IShares Fundamental

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

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

Diversification Opportunities for Citadel Income and IShares Fundamental

0.48

Correlation Coefficient

Citadel Income  IShares Fundamental

Very weak diversification

The 3 months correlation between Citadel and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citadel Income and iShares Fundamental Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Fundamental and Citadel Income 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 Citadel Income are associated (or correlated) with IShares Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Fundamental has no effect on the direction of Citadel Income i.e., Citadel Income and IShares Fundamental go up and down completely randomly.

Pair Corralation between Citadel Income and IShares Fundamental

Assuming the 90 days trading horizon Citadel Income is expected to generate 1.41 times less return on investment than IShares Fundamental. In addition to that, Citadel Income is 2.5 times more volatile than iShares Fundamental Hedged. It trades about 0.05 of its total potential returns per unit of risk. iShares Fundamental Hedged is currently generating about 0.18 per unit of volatility. If you would invest  5,321  in iShares Fundamental Hedged on September 3, 2024 and sell it today you would earn a total of  413.00  from holding iShares Fundamental Hedged or generate 7.76% return on investment over 90 days.

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

Citadel Income  vs.  iShares Fundamental Hedged

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.

iShares Fundamental

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Fundamental Hedged are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares Fundamental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citadel Income and IShares Fundamental

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

The idea behind Citadel Income and iShares Fundamental Hedged 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 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.