Correlation Between Citi Trends and Destination
Can any of the company-specific risk be diversified away by investing in both Citi Trends and Destination 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 Destination into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and Destination XL Group, you can compare the effects of market volatilities on Citi Trends and Destination 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 Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and Destination.
Diversification Opportunities for Citi Trends and Destination
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citi and Destination is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Destination XL Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destination XL Group 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 Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destination XL Group has no effect on the direction of Citi Trends i.e., Citi Trends and Destination go up and down completely randomly.
Pair Corralation between Citi Trends and Destination
Given the investment horizon of 90 days Citi Trends is expected to generate 1.09 times more return on investment than Destination. However, Citi Trends is 1.09 times more volatile than Destination XL Group. It trades about -0.02 of its potential returns per unit of risk. Destination XL Group is currently generating about -0.06 per unit of risk. If you would invest 3,110 in Citi Trends on August 23, 2024 and sell it today you would lose (1,321) from holding Citi Trends or give up 42.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citi Trends vs. Destination XL Group
Performance |
| Timeline |
| Citi Trends |
| Destination XL Group |
Citi Trends and Destination Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and Destination
The main advantage of trading using opposite Citi Trends and Destination positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, Destination 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 Destination will offset losses from the drop in Destination's long position.| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
| Destination vs. Cato Corporation | Destination vs. Zumiez Inc | Destination vs. Tillys Inc | Destination 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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