Correlation Between Citi Trends and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Citi Trends and NETGEAR 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 NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and NETGEAR, you can compare the effects of market volatilities on Citi Trends and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and NETGEAR.
Diversification Opportunities for Citi Trends and NETGEAR
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citi and NETGEAR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Citi Trends i.e., Citi Trends and NETGEAR go up and down completely randomly.
Pair Corralation between Citi Trends and NETGEAR
Given the investment horizon of 90 days Citi Trends is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, Citi Trends is 1.03 times less risky than NETGEAR. The stock trades about -0.02 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,930 in NETGEAR on September 1, 2024 and sell it today you would earn a total of 530.00 from holding NETGEAR or generate 27.46% 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. NETGEAR
Performance |
| Timeline |
| Citi Trends |
| NETGEAR |
Citi Trends and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and NETGEAR
The main advantage of trading using opposite Citi Trends and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
| NETGEAR vs. Comtech Telecommunications Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Silicom | NETGEAR vs. Knowles Cor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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