Correlation Between City National and Defensive Market
Can any of the company-specific risk be diversified away by investing in both City National and Defensive Market 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 Defensive Market 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 Defensive Market Strategies, you can compare the effects of market volatilities on City National and Defensive Market 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 Defensive Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Defensive Market.
Diversification Opportunities for City National and Defensive Market
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between City and Defensive is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Defensive Market Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defensive Market Str 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 Defensive Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defensive Market Str has no effect on the direction of City National i.e., City National and Defensive Market go up and down completely randomly.
Pair Corralation between City National and Defensive Market
Assuming the 90 days horizon City National is expected to generate 2.01 times less return on investment than Defensive Market. But when comparing it to its historical volatility, City National Rochdale is 7.5 times less risky than Defensive Market. It trades about 1.05 of its potential returns per unit of risk. Defensive Market Strategies is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,170 in Defensive Market Strategies on November 3, 2024 and sell it today you would earn a total of 30.00 from holding Defensive Market Strategies or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
City National Rochdale vs. Defensive Market Strategies
Performance |
| Timeline |
| City National Rochdale |
| Defensive Market Str |
City National and Defensive Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City National and Defensive Market
The main advantage of trading using opposite City National and Defensive Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City National position performs unexpectedly, Defensive Market 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 Defensive Market will offset losses from the drop in Defensive Market's long position.| City National vs. Jpmorgan Ultra Short Municipal | City National vs. Federated Government Income | City National vs. Transamerica Intermediate Muni | City National vs. Hartford Municipal Short |
| Defensive Market vs. Franklin Gold Precious | Defensive Market vs. Great West Goldman Sachs | Defensive Market vs. Vy Goldman Sachs | Defensive Market vs. Short Precious Metals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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