Correlation Between Citizens and American Funds
Can any of the company-specific risk be diversified away by investing in both Citizens and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and American Funds 2040, you can compare the effects of market volatilities on Citizens and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and American Funds.
Diversification Opportunities for Citizens and American Funds
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citizens and American is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Citizens i.e., Citizens and American Funds go up and down completely randomly.
Pair Corralation between Citizens and American Funds
Considering the 90-day investment horizon Citizens is expected to under-perform the American Funds. In addition to that, Citizens is 5.16 times more volatile than American Funds 2040. It trades about -0.27 of its total potential returns per unit of risk. American Funds 2040 is currently generating about -0.16 per unit of volatility. If you would invest 2,058 in American Funds 2040 on December 9, 2024 and sell it today you would lose (50.00) from holding American Funds 2040 or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens vs. American Funds 2040
Performance |
| Timeline |
| Citizens |
| American Funds 2040 |
Citizens and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and American Funds
The main advantage of trading using opposite Citizens and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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