Correlation Between Citigroup and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Citigroup and Rithm Capital 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 Citigroup and Rithm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Rithm Capital Corp, you can compare the effects of market volatilities on Citigroup and Rithm Capital 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 Citigroup with a short position of Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Rithm Capital.
Diversification Opportunities for Citigroup and Rithm Capital
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Rithm is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp and Citigroup 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 Citigroup are associated (or correlated) with Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of Citigroup i.e., Citigroup and Rithm Capital go up and down completely randomly.
Pair Corralation between Citigroup and Rithm Capital
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.91 times more return on investment than Rithm Capital. However, Citigroup is 1.91 times more volatile than Rithm Capital Corp. It trades about 0.07 of its potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.09 per unit of risk. If you would invest 4,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 2,715 from holding Citigroup or generate 62.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Rithm Capital Corp
Performance |
| Timeline |
| Citigroup |
| Rithm Capital Corp |
Citigroup and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Rithm Capital
The main advantage of trading using opposite Citigroup and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Rithm Capital 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 Rithm Capital will offset losses from the drop in Rithm Capital's long position.The idea behind Citigroup and Rithm Capital Corp 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.| Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. Rithm Capital Corp | Rithm Capital vs. PennyMac Mortgage 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 Stocks Directory module to find actively traded stocks across global markets.
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