Correlation Between Citizens and Torque Lifestyle
Can any of the company-specific risk be diversified away by investing in both Citizens and Torque Lifestyle 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 Torque Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Torque Lifestyle Brands, you can compare the effects of market volatilities on Citizens and Torque Lifestyle 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 Torque Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Torque Lifestyle.
Diversification Opportunities for Citizens and Torque Lifestyle
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Torque is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Torque Lifestyle Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torque Lifestyle Brands 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 Torque Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torque Lifestyle Brands has no effect on the direction of Citizens i.e., Citizens and Torque Lifestyle go up and down completely randomly.
Pair Corralation between Citizens and Torque Lifestyle
Considering the 90-day investment horizon Citizens is expected to generate 5.68 times less return on investment than Torque Lifestyle. But when comparing it to its historical volatility, Citizens is 4.6 times less risky than Torque Lifestyle. It trades about 0.06 of its potential returns per unit of risk. Torque Lifestyle Brands is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.36 in Torque Lifestyle Brands on December 4, 2024 and sell it today you would lose (0.08) from holding Torque Lifestyle Brands or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.37% |
| Values | Daily Returns |
Citizens vs. Torque Lifestyle Brands
Performance |
| Timeline |
| Citizens |
| Torque Lifestyle Brands |
Citizens and Torque Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and Torque Lifestyle
The main advantage of trading using opposite Citizens and Torque Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, Torque Lifestyle 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 Torque Lifestyle will offset losses from the drop in Torque Lifestyle'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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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