Correlation Between City National and Rational/pier
Can any of the company-specific risk be diversified away by investing in both City National and Rational/pier 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 City National and Rational/pier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City National Rochdale and Rationalpier 88 Convertible, you can compare the effects of market volatilities on City National and Rational/pier 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 City National with a short position of Rational/pier. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Rational/pier.
Diversification Opportunities for City National and Rational/pier
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between City and Rational/pier is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv and City National 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 City National Rochdale are associated (or correlated) with Rational/pier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of City National i.e., City National and Rational/pier go up and down completely randomly.
Pair Corralation between City National and Rational/pier
Assuming the 90 days horizon City National Rochdale is expected to generate 1.76 times more return on investment than Rational/pier. However, City National is 1.76 times more volatile than Rationalpier 88 Convertible. It trades about 0.19 of its potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about 0.18 per unit of risk. If you would invest 3,397 in City National Rochdale on September 3, 2024 and sell it today you would earn a total of 695.00 from holding City National Rochdale or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
City National Rochdale vs. Rationalpier 88 Convertible
Performance |
| Timeline |
| City National Rochdale |
| Rationalpier 88 Conv |
City National and Rational/pier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City National and Rational/pier
The main advantage of trading using opposite City National and Rational/pier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City National position performs unexpectedly, Rational/pier 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 Rational/pier will offset losses from the drop in Rational/pier's long position.| City National vs. The Gabelli Small | City National vs. Jhancock Diversified Macro | City National vs. Wasatch Small Cap | City National vs. Tiaa Cref Smallmid Cap Equity |
| Rational/pier vs. Franklin Vertible Securities | Rational/pier vs. Franklin Vertible Securities | Rational/pier vs. Allianzgi Vertible Fund | Rational/pier vs. Virtus Convertible |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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