Correlation Between American Eagle and Citi Trends
Can any of the company-specific risk be diversified away by investing in both American Eagle 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 American Eagle and Citi Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and Citi Trends, you can compare the effects of market volatilities on American Eagle 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 American Eagle with a short position of Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Citi Trends.
Diversification Opportunities for American Eagle and Citi Trends
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Citi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and American Eagle 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 American Eagle Outfitters 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 American Eagle i.e., American Eagle and Citi Trends go up and down completely randomly.
Pair Corralation between American Eagle and Citi Trends
Considering the 90-day investment horizon American Eagle Outfitters is expected to generate 0.86 times more return on investment than Citi Trends. However, American Eagle Outfitters is 1.16 times less risky than Citi Trends. It trades about 0.03 of its potential returns per unit of risk. Citi Trends is currently generating about -0.01 per unit of risk. If you would invest 1,479 in American Eagle Outfitters on September 3, 2024 and sell it today you would earn a total of 445.00 from holding American Eagle Outfitters or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Citi Trends
Performance |
| Timeline |
| American Eagle Outfitters |
| Citi Trends |
American Eagle and Citi Trends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Citi Trends
The main advantage of trading using opposite American Eagle and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle 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.| American Eagle vs. Ross Stores | American Eagle vs. Childrens Place | American Eagle vs. Buckle Inc | American Eagle vs. Guess Inc |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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