Correlation Between Destination and Citi Trends
Can any of the company-specific risk be diversified away by investing in both Destination and Citi Trends 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 Destination and Citi Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Destination XL Group and Citi Trends, you can compare the effects of market volatilities on Destination and Citi Trends 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 Destination with a short position of Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destination and Citi Trends.
Diversification Opportunities for Destination and Citi Trends
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Destination and Citi is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Destination 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 Destination XL Group are associated (or correlated) with Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of Destination i.e., Destination and Citi Trends go up and down completely randomly.
Pair Corralation between Destination and Citi Trends
Given the investment horizon of 90 days Destination XL Group is expected to generate 4.27 times more return on investment than Citi Trends. However, Destination is 4.27 times more volatile than Citi Trends. It trades about 0.22 of its potential returns per unit of risk. Citi Trends is currently generating about 0.32 per unit of risk. If you would invest 225.00 in Destination XL Group on October 20, 2024 and sell it today you would earn a total of 51.00 from holding Destination XL Group or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Destination XL Group vs. Citi Trends
Performance |
| Timeline |
| Destination XL Group |
| Citi Trends |
Destination and Citi Trends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Destination and Citi Trends
The main advantage of trading using opposite Destination and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Destination position performs unexpectedly, Citi Trends 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 Citi Trends will offset losses from the drop in Citi Trends' long position.| Destination vs. Cato Corporation | Destination vs. Zumiez Inc | Destination vs. Tillys Inc | Destination vs. Duluth Holdings |
| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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