Correlation Between Citizens and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both Citizens and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Citizens and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and ESSILORLUXOTTICA.
Diversification Opportunities for Citizens and ESSILORLUXOTTICA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citizens and ESSILORLUXOTTICA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Citizens i.e., Citizens and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between Citizens and ESSILORLUXOTTICA
Considering the 90-day investment horizon Citizens is expected to under-perform the ESSILORLUXOTTICA. In addition to that, Citizens is 1.55 times more volatile than ESSILORLUXOTTICA 12ON. It trades about -0.25 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about -0.02 per unit of volatility. If you would invest 13,400 in ESSILORLUXOTTICA 12ON on December 9, 2024 and sell it today you would lose (200.00) from holding ESSILORLUXOTTICA 12ON or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citizens vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| Citizens |
| ESSILORLUXOTTICA 12ON |
Citizens and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and ESSILORLUXOTTICA
The main advantage of trading using opposite Citizens and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA'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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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