Correlation Between Citizens and 654106AJ2

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Can any of the company-specific risk be diversified away by investing in both Citizens and 654106AJ2 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 654106AJ2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and NIKE INC, you can compare the effects of market volatilities on Citizens and 654106AJ2 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 654106AJ2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and 654106AJ2.

Diversification Opportunities for Citizens and 654106AJ2

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citizens and 654106AJ2 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and NIKE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 654106AJ2 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 654106AJ2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 654106AJ2 has no effect on the direction of Citizens i.e., Citizens and 654106AJ2 go up and down completely randomly.

Pair Corralation between Citizens and 654106AJ2

Considering the 90-day investment horizon Citizens is expected to generate 12.22 times more return on investment than 654106AJ2. However, Citizens is 12.22 times more volatile than NIKE INC. It trades about 0.05 of its potential returns per unit of risk. NIKE INC is currently generating about 0.0 per unit of risk. If you would invest  260.00  in Citizens on September 2, 2024 and sell it today you would earn a total of  188.00  from holding Citizens or generate 72.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Citizens  vs.  NIKE INC

 Performance 
       Timeline  
Citizens 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Citizens are ranked lower than 11 (%) 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.
654106AJ2 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NIKE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 654106AJ2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citizens and 654106AJ2 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citizens and 654106AJ2

The main advantage of trading using opposite Citizens and 654106AJ2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens position performs unexpectedly, 654106AJ2 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 654106AJ2 will offset losses from the drop in 654106AJ2's long position.
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The idea behind Citizens and NIKE INC 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.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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