Correlation Between Citizens and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Citizens and Royal Caribbean 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 Royal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Royal Caribbean Group, you can compare the effects of market volatilities on Citizens and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Royal Caribbean.
Diversification Opportunities for Citizens and Royal Caribbean
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Royal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Group 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of Citizens i.e., Citizens and Royal Caribbean go up and down completely randomly.
Pair Corralation between Citizens and Royal Caribbean
Considering the 90-day investment horizon Citizens is expected to generate 0.87 times more return on investment than Royal Caribbean. However, Citizens is 1.15 times less risky than Royal Caribbean. It trades about 0.03 of its potential returns per unit of risk. Royal Caribbean Group is currently generating about -0.06 per unit of risk. If you would invest 416.00 in Citizens on December 11, 2024 and sell it today you would earn a total of 5.00 from holding Citizens or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Citizens vs. Royal Caribbean Group
Performance |
| Timeline |
| Citizens |
| Royal Caribbean Group |
Citizens and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and Royal Caribbean
The main advantage of trading using opposite Citizens and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean'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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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