Correlation Between Citizens and Strategy Shares

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Can any of the company-specific risk be diversified away by investing in both Citizens and Strategy Shares 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 Strategy Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Strategy Shares NewfoundReSolve, you can compare the effects of market volatilities on Citizens and Strategy Shares 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 Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Strategy Shares.

Diversification Opportunities for Citizens and Strategy Shares

CitizensStrategyDiversified AwayCitizensStrategyDiversified Away100%
0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Citizens and Strategy is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Strategy Shares NewfoundReSolv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Newf 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Newf has no effect on the direction of Citizens i.e., Citizens and Strategy Shares go up and down completely randomly.

Pair Corralation between Citizens and Strategy Shares

Considering the 90-day investment horizon Citizens is expected to generate 4.39 times more return on investment than Strategy Shares. However, Citizens is 4.39 times more volatile than Strategy Shares NewfoundReSolve. It trades about 0.07 of its potential returns per unit of risk. Strategy Shares NewfoundReSolve is currently generating about -0.05 per unit of risk. If you would invest  446.00  in Citizens on December 3, 2024 and sell it today you would earn a total of  50.00  from holding Citizens or generate 11.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Citizens  vs.  Strategy Shares NewfoundReSolv

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020
JavaScript chart by amCharts 3.21.15CIA ROMO
       Timeline  
Citizens 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Citizens are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Citizens sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15JanFebFebMar44.555.5
Strategy Shares Newf 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Strategy Shares NewfoundReSolve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Strategy Shares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar31.53232.533

Citizens and Strategy Shares Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.31-8.47-5.63-2.790.02.945.878.8111.74 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15CIA ROMO
       Returns  

Pair Trading with Citizens and Strategy Shares

The main advantage of trading using opposite Citizens and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' long position.
The idea behind Citizens and Strategy Shares NewfoundReSolve 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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