Correlation Between Citizens and AAP
Can any of the company-specific risk be diversified away by investing in both Citizens and AAP 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 Citizens and AAP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and AAP Inc, you can compare the effects of market volatilities on Citizens and AAP 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 Citizens with a short position of AAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and AAP.
Diversification Opportunities for Citizens and AAP
Very good diversification
The 3 months correlation between Citizens and AAP is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and AAP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAP Inc and Citizens 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 Citizens are associated (or correlated) with AAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAP Inc has no effect on the direction of Citizens i.e., Citizens and AAP go up and down completely randomly.
Pair Corralation between Citizens and AAP
Considering the 90-day investment horizon Citizens is expected to under-perform the AAP. But the stock apears to be less risky and, when comparing its historical volatility, Citizens is 12.09 times less risky than AAP. The stock trades about -0.1 of its potential returns per unit of risk. The AAP Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 0.01 in AAP Inc on December 6, 2024 and sell it today you would earn a total of 0.01 from holding AAP Inc or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citizens vs. AAP Inc
Performance |
| Timeline |
| Citizens |
| AAP Inc |
Citizens and AAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and AAP
The main advantage of trading using opposite Citizens and AAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, AAP 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 AAP will offset losses from the drop in AAP's long position.| Citizens vs. CNO Financial Group | ||
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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