Correlation Between Citadel Income and Global Healthcare

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

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

Diversification Opportunities for Citadel Income and Global Healthcare

-0.32

Correlation Coefficient

Citadel Income  Global Healthcare

Very good diversification

The 3 months correlation between Citadel and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Citadel Income and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income 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 Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of Citadel Income i.e., Citadel Income and Global Healthcare go up and down completely randomly.

Pair Corralation between Citadel Income and Global Healthcare

Assuming the 90 days trading horizon Citadel Income is expected to generate 1.67 times less return on investment than Global Healthcare. But when comparing it to its historical volatility, Citadel Income is 2.32 times less risky than Global Healthcare. It trades about 0.03 of its potential returns per unit of risk. Global Healthcare Income is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  775.00  in Global Healthcare Income on September 21, 2024 and sell it today you would lose (10.00) from holding Global Healthcare Income or give up 1.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.7%
Values	Daily Returns

Citadel Income  vs.  Global Healthcare Income

Citadel Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citadel Income are ranked lower than 4 (%) 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.

Global Healthcare Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Healthcare Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Pair Trading with Citadel Income and Global Healthcare

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

The idea behind Citadel Income and Global Healthcare Income 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.