Correlation Between Rackspace Technology and CiT

Can any of the company-specific risk be diversified away by investing in both Rackspace Technology and CiT 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 Rackspace Technology and CiT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rackspace Technology and CiT Inc, you can compare the effects of market volatilities on Rackspace Technology and CiT 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 Rackspace Technology with a short position of CiT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rackspace Technology and CiT.

Diversification Opportunities for Rackspace Technology and CiT

0.84

Correlation Coefficient

Rackspace Technology  CiT

Very poor diversification

The 3 months correlation between Rackspace and CiT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Rackspace Technology and CiT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CiT Inc and Rackspace Technology 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 Rackspace Technology are associated (or correlated) with CiT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CiT Inc has no effect on the direction of Rackspace Technology i.e., Rackspace Technology and CiT go up and down completely randomly.

Pair Corralation between Rackspace Technology and CiT

Considering the 90-day investment horizon Rackspace Technology is expected to under-perform the CiT. In addition to that, Rackspace Technology is 1.23 times more volatile than CiT Inc. It trades about -0.06 of its total potential returns per unit of risk. CiT Inc is currently generating about 0.32 per unit of volatility. If you would invest  502.00  in CiT Inc on February 16, 2025 and sell it today you would earn a total of  108.00  from holding CiT Inc or generate 21.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Rackspace Technology  vs.  CiT Inc

Rackspace Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rackspace Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CiT Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CiT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Rackspace Technology and CiT

The main advantage of trading using opposite Rackspace Technology and CiT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rackspace Technology position performs unexpectedly, CiT 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 CiT will offset losses from the drop in CiT's long position.

The idea behind Rackspace Technology and CiT 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.