Correlation Between First Trust and Citi Trends
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Citi Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Flexible and Citi Trends, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Citi Trends.
Diversification Opportunities for First Trust and Citi Trends
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Citi is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Flexible and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and First Trust 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 First Trust Flexible 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 First Trust i.e., First Trust and Citi Trends go up and down completely randomly.
Pair Corralation between First Trust and Citi Trends
Given the investment horizon of 90 days First Trust Flexible is expected to generate 0.26 times more return on investment than Citi Trends. However, First Trust Flexible is 3.87 times less risky than Citi Trends. It trades about 0.03 of its potential returns per unit of risk. Citi Trends is currently generating about -0.01 per unit of risk. If you would invest 1,536 in First Trust Flexible on August 28, 2024 and sell it today you would earn a total of 191.00 from holding First Trust Flexible or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Flexible vs. Citi Trends
Performance |
| Timeline |
| First Trust Flexible |
| Citi Trends |
First Trust and Citi Trends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Citi Trends
The main advantage of trading using opposite First Trust and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Franklin Liberty Intermediate | First Trust vs. Hartford Municipal Opportunities | First Trust vs. IQ MacKay Municipal |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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