Correlation Between Citi Trends and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Citi Trends and HE Equipment 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 HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and HE Equipment Services, you can compare the effects of market volatilities on Citi Trends and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and HE Equipment.
Diversification Opportunities for Citi Trends and HE Equipment
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citi and HEES is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Citi Trends i.e., Citi Trends and HE Equipment go up and down completely randomly.
Pair Corralation between Citi Trends and HE Equipment
Given the investment horizon of 90 days Citi Trends is expected to generate 2.21 times more return on investment than HE Equipment. However, Citi Trends is 2.21 times more volatile than HE Equipment Services. It trades about 0.51 of its potential returns per unit of risk. HE Equipment Services is currently generating about -0.16 per unit of risk. If you would invest 1,633 in Citi Trends on September 19, 2024 and sell it today you would earn a total of 982.00 from holding Citi Trends or generate 60.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citi Trends vs. HE Equipment Services
Performance |
| Timeline |
| Citi Trends |
| HE Equipment Services |
Citi Trends and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and HE Equipment
The main advantage of trading using opposite Citi Trends and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| Citi Trends vs. Capri Holdings | Citi Trends vs. Movado Group | Citi Trends vs. Tapestry | Citi Trends vs. Brilliant Earth Group |
| HE Equipment vs. McGrath RentCorp | HE Equipment vs. Custom Truck One | HE Equipment vs. Alta Equipment Group | HE Equipment vs. PROG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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