Correlation Between Citi Trends and Dennys Corp
Can any of the company-specific risk be diversified away by investing in both Citi Trends and Dennys Corp 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 Dennys Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and Dennys Corp, you can compare the effects of market volatilities on Citi Trends and Dennys Corp 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 Dennys Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and Dennys Corp.
Diversification Opportunities for Citi Trends and Dennys Corp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citi and Dennys is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Dennys Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dennys Corp 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 Dennys Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dennys Corp has no effect on the direction of Citi Trends i.e., Citi Trends and Dennys Corp go up and down completely randomly.
Pair Corralation between Citi Trends and Dennys Corp
Given the investment horizon of 90 days Citi Trends is expected to generate 1.15 times more return on investment than Dennys Corp. However, Citi Trends is 1.15 times more volatile than Dennys Corp. It trades about -0.02 of its potential returns per unit of risk. Dennys Corp is currently generating about -0.03 per unit of risk. If you would invest 3,013 in Citi Trends on August 24, 2024 and sell it today you would lose (1,122) from holding Citi Trends or give up 37.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citi Trends vs. Dennys Corp
Performance |
| Timeline |
| Citi Trends |
| Dennys Corp |
Citi Trends and Dennys Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and Dennys Corp
The main advantage of trading using opposite Citi Trends and Dennys Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, Dennys Corp 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 Dennys Corp will offset losses from the drop in Dennys Corp's long position.| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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