Correlation Between Royal Bank and CITIGROUP CDR
Can any of the company-specific risk be diversified away by investing in both Royal Bank and CITIGROUP CDR 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 Royal Bank and CITIGROUP CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and CITIGROUP CDR, you can compare the effects of market volatilities on Royal Bank and CITIGROUP CDR 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 Royal Bank with a short position of CITIGROUP CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and CITIGROUP CDR.
Diversification Opportunities for Royal Bank and CITIGROUP CDR
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royal and CITIGROUP is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and CITIGROUP CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP CDR and Royal Bank 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 Royal Bank of are associated (or correlated) with CITIGROUP CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP CDR has no effect on the direction of Royal Bank i.e., Royal Bank and CITIGROUP CDR go up and down completely randomly.
Pair Corralation between Royal Bank and CITIGROUP CDR
Assuming the 90 days trading horizon Royal Bank is expected to generate 11.19 times less return on investment than CITIGROUP CDR. But when comparing it to its historical volatility, Royal Bank of is 7.07 times less risky than CITIGROUP CDR. It trades about 0.23 of its potential returns per unit of risk. CITIGROUP CDR is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,859 in CITIGROUP CDR on April 24, 2025 and sell it today you would earn a total of 1,160 from holding CITIGROUP CDR or generate 40.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Royal Bank of vs. CITIGROUP CDR
Performance |
Timeline |
Royal Bank |
CITIGROUP CDR |
Royal Bank and CITIGROUP CDR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Royal Bank and CITIGROUP CDR
The main advantage of trading using opposite Royal Bank and CITIGROUP CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, CITIGROUP CDR 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 CITIGROUP CDR will offset losses from the drop in CITIGROUP CDR's long position.Royal Bank vs. Financial 15 Split | Royal Bank vs. US Financial 15 | Royal Bank vs. Prime Dividend Corp | Royal Bank vs. Commerce Split Corp |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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