Correlation Between Citi Trends and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Citi Trends and BJs Restaurants 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 Citi Trends and BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and BJs Restaurants, you can compare the effects of market volatilities on Citi Trends and BJs Restaurants 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 Citi Trends with a short position of BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and BJs Restaurants.
Diversification Opportunities for Citi Trends and BJs Restaurants
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citi and BJs is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants and Citi Trends 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 Citi Trends are associated (or correlated) with BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Citi Trends i.e., Citi Trends and BJs Restaurants go up and down completely randomly.
Pair Corralation between Citi Trends and BJs Restaurants
Given the investment horizon of 90 days Citi Trends is expected to under-perform the BJs Restaurants. In addition to that, Citi Trends is 1.12 times more volatile than BJs Restaurants. It trades about -0.02 of its total potential returns per unit of risk. BJs Restaurants is currently generating about 0.02 per unit of volatility. If you would invest 3,024 in BJs Restaurants on August 24, 2024 and sell it today you would earn a total of 428.00 from holding BJs Restaurants or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citi Trends vs. BJs Restaurants
Performance |
| Timeline |
| Citi Trends |
| BJs Restaurants |
Citi Trends and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and BJs Restaurants
The main advantage of trading using opposite Citi Trends and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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