Correlation Between Citi Trends and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Citi Trends and Diageo PLC 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 Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and Diageo PLC ADR, you can compare the effects of market volatilities on Citi Trends and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and Diageo PLC.
Diversification Opportunities for Citi Trends and Diageo PLC
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citi and Diageo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Citi Trends i.e., Citi Trends and Diageo PLC go up and down completely randomly.
Pair Corralation between Citi Trends and Diageo PLC
Given the investment horizon of 90 days Citi Trends is expected to generate 2.16 times more return on investment than Diageo PLC. However, Citi Trends is 2.16 times more volatile than Diageo PLC ADR. It trades about 0.04 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.06 per unit of risk. If you would invest 1,859 in Citi Trends on November 28, 2024 and sell it today you would earn a total of 660.00 from holding Citi Trends or generate 35.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citi Trends vs. Diageo PLC ADR
Performance |
| Timeline |
| Citi Trends |
| Diageo PLC ADR |
Citi Trends and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and Diageo PLC
The main advantage of trading using opposite Citi Trends and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Brown Forman | Diageo PLC vs. Constellation Brands Class |
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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