Correlation Between CiT and Rackspace Technology
Can any of the company-specific risk be diversified away by investing in both CiT and Rackspace Technology 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 CiT and Rackspace Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CiT Inc and Rackspace Technology, you can compare the effects of market volatilities on CiT and Rackspace Technology 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 CiT with a short position of Rackspace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CiT and Rackspace Technology.
Diversification Opportunities for CiT and Rackspace Technology
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CiT and Rackspace is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CiT Inc and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology and CiT 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 CiT Inc are associated (or correlated) with Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of CiT i.e., CiT and Rackspace Technology go up and down completely randomly.
Pair Corralation between CiT and Rackspace Technology
Given the investment horizon of 90 days CiT is expected to generate 3.08 times less return on investment than Rackspace Technology. But when comparing it to its historical volatility, CiT Inc is 1.68 times less risky than Rackspace Technology. It trades about 0.04 of its potential returns per unit of risk. Rackspace Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 132.00 in Rackspace Technology on September 4, 2024 and sell it today you would earn a total of 133.00 from holding Rackspace Technology or generate 100.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CiT Inc vs. Rackspace Technology
Performance |
| Timeline |
| CiT Inc |
| Rackspace Technology |
CiT and Rackspace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CiT and Rackspace Technology
The main advantage of trading using opposite CiT and Rackspace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CiT position performs unexpectedly, Rackspace Technology 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 Rackspace Technology will offset losses from the drop in Rackspace Technology's long position.| CiT vs. Alarum Technologies | CiT vs. Nutanix | CiT vs. Palo Alto Networks | CiT vs. GigaCloud Technology Class |
| Rackspace Technology vs. GigaCloud Technology Class | Rackspace Technology vs. Alarum Technologies | Rackspace Technology vs. Stem Inc | Rackspace Technology vs. Pagaya Technologies |
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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