Correlation Between Advance Auto and Citi Trends
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Citi Trends 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 Advance Auto and Citi Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and Citi Trends, you can compare the effects of market volatilities on Advance Auto and Citi Trends 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 Advance Auto with a short position of Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Citi Trends.
Diversification Opportunities for Advance Auto and Citi Trends
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Advance and Citi is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Advance Auto 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 Advance Auto Parts are associated (or correlated) with Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of Advance Auto i.e., Advance Auto and Citi Trends go up and down completely randomly.
Pair Corralation between Advance Auto and Citi Trends
Considering the 90-day investment horizon Advance Auto Parts is expected to generate 1.16 times more return on investment than Citi Trends. However, Advance Auto is 1.16 times more volatile than Citi Trends. It trades about 0.04 of its potential returns per unit of risk. Citi Trends is currently generating about 0.04 per unit of risk. If you would invest 3,934 in Advance Auto Parts on August 26, 2024 and sell it today you would earn a total of 145.00 from holding Advance Auto Parts or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advance Auto Parts vs. Citi Trends
Performance |
| Timeline |
| Advance Auto Parts |
| Citi Trends |
Advance Auto and Citi Trends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and Citi Trends
The main advantage of trading using opposite Advance Auto and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Citi Trends 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 Citi Trends will offset losses from the drop in Citi Trends' long position.| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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