Correlation Between Citadel Income and Capital Power

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

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

Diversification Opportunities for Citadel Income and Capital Power

-0.43

Correlation Coefficient

Citadel Income  Capital Power

Very good diversification

The 3 months correlation between Citadel and Capital is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citadel Income and Capital Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Power 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 Capital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Power has no effect on the direction of Citadel Income i.e., Citadel Income and Capital Power go up and down completely randomly.

Pair Corralation between Citadel Income and Capital Power

Assuming the 90 days trading horizon Citadel Income is expected to generate 4.96 times less return on investment than Capital Power. But when comparing it to its historical volatility, Citadel Income is 1.2 times less risky than Capital Power. It trades about 0.04 of its potential returns per unit of risk. Capital Power is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,012  in Capital Power on October 25, 2024 and sell it today you would earn a total of  1,052  from holding Capital Power or generate 20.99% return on investment over 90 days.

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

Citadel Income  vs.  Capital Power

Citadel Income

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citadel Income are ranked lower than 2 (%) 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.

Capital Power

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Power are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Capital Power displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citadel Income and Capital Power

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

The idea behind Citadel Income and Capital Power 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.