Correlation Between Citi Trends and Capri Holdings

Can any of the company-specific risk be diversified away by investing in both Citi Trends and Capri Holdings 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 Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citi Trends and Capri Holdings, you can compare the effects of market volatilities on Citi Trends and Capri Holdings 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 Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and Capri Holdings.

Diversification Opportunities for Citi Trends and Capri Holdings

0.53

Correlation Coefficient

Citi Trends  Capri Holdings

Very weak diversification

The 3 months correlation between Citi and Capri is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings 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 Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Citi Trends i.e., Citi Trends and Capri Holdings go up and down completely randomly.

Pair Corralation between Citi Trends and Capri Holdings

Given the investment horizon of 90 days Citi Trends is expected to under-perform the Capri Holdings. In addition to that, Citi Trends is 1.08 times more volatile than Capri Holdings. It trades about -0.09 of its total potential returns per unit of risk. Capri Holdings is currently generating about 0.01 per unit of volatility. If you would invest  2,096  in Capri Holdings on December 27, 2024 and sell it today you would lose (28.00) from holding Capri Holdings or give up 1.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citi Trends  vs.  Capri Holdings

Citi Trends

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citi Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Capri Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Capri Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citi Trends and Capri Holdings

The main advantage of trading using opposite Citi Trends and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, Capri Holdings 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.

The idea behind Citi Trends and Capri Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.