Correlation Between Citi Trends and Canada Goose

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

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

Diversification Opportunities for Citi Trends and Canada Goose

0.44

Correlation Coefficient

Citi Trends  Canada Goose

Very weak diversification

The 3 months correlation between Citi and Canada is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose 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 Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Citi Trends i.e., Citi Trends and Canada Goose go up and down completely randomly.

Pair Corralation between Citi Trends and Canada Goose

Given the investment horizon of 90 days Citi Trends is expected to under-perform the Canada Goose. But the stock apears to be less risky and, when comparing its historical volatility, Citi Trends is 1.07 times less risky than Canada Goose. The stock trades about -0.02 of its potential returns per unit of risk. The Canada Goose Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  993.00  in Canada Goose Holdings on December 3, 2024 and sell it today you would earn a total of  29.00  from holding Canada Goose Holdings or generate 2.92% return on investment over 90 days.

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

Citi Trends  vs.  Canada Goose Holdings

Citi Trends

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Citi Trends may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Canada Goose Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canada Goose Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Canada Goose may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citi Trends and Canada Goose

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

The idea behind Citi Trends and Canada Goose 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.