Correlation Between Citadel Income and Blue Ribbon

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

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

Diversification Opportunities for Citadel Income and Blue Ribbon

0.61

Correlation Coefficient

Citadel Income  Blue Ribbon

Poor diversification

The 3 months correlation between Citadel and Blue is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citadel Income and Blue Ribbon Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ribbon 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 Blue Ribbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ribbon Income has no effect on the direction of Citadel Income i.e., Citadel Income and Blue Ribbon go up and down completely randomly.

Pair Corralation between Citadel Income and Blue Ribbon

Assuming the 90 days trading horizon Citadel Income is expected to generate 1.04 times less return on investment than Blue Ribbon. In addition to that, Citadel Income is 1.98 times more volatile than Blue Ribbon Income. It trades about 0.05 of its total potential returns per unit of risk. Blue Ribbon Income is currently generating about 0.1 per unit of volatility. If you would invest  811.00  in Blue Ribbon Income on September 2, 2024 and sell it today you would earn a total of  41.00  from holding Blue Ribbon Income or generate 5.06% return on investment over 90 days.

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

Citadel Income  vs.  Blue Ribbon Income

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.

Blue Ribbon Income

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Ribbon Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Blue Ribbon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citadel Income and Blue Ribbon

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

The idea behind Citadel Income and Blue Ribbon 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.