Correlation Between Citi Trends and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both Citi Trends and Shoe Carnival 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 Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and Shoe Carnival, you can compare the effects of market volatilities on Citi Trends and Shoe Carnival 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and Shoe Carnival.
Diversification Opportunities for Citi Trends and Shoe Carnival
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citi and Shoe is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Citi Trends i.e., Citi Trends and Shoe Carnival go up and down completely randomly.
Pair Corralation between Citi Trends and Shoe Carnival
Given the investment horizon of 90 days Citi Trends is expected to under-perform the Shoe Carnival. In addition to that, Citi Trends is 1.13 times more volatile than Shoe Carnival. It trades about -0.02 of its total potential returns per unit of risk. Shoe Carnival is currently generating about 0.04 per unit of volatility. If you would invest 2,458 in Shoe Carnival on August 23, 2024 and sell it today you would earn a total of 927.00 from holding Shoe Carnival or generate 37.71% 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. Shoe Carnival
Performance |
| Timeline |
| Citi Trends |
| Shoe Carnival |
Citi Trends and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and Shoe Carnival
The main advantage of trading using opposite Citi Trends and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
| Shoe Carnival vs. Ross Stores | Shoe Carnival vs. Childrens Place | Shoe Carnival vs. Guess Inc | Shoe Carnival vs. Cato Corporation |
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 CEOs Directory module to screen CEOs from public companies around the world.
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