Correlation Between Citi Trends and Middlebury National

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

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

Diversification Opportunities for Citi Trends and Middlebury National

0.76

Correlation Coefficient

Citi Trends  Middlebury National

Poor diversification

The 3 months correlation between Citi and Middlebury is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Middlebury National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlebury National 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 Middlebury National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlebury National has no effect on the direction of Citi Trends i.e., Citi Trends and Middlebury National go up and down completely randomly.

Pair Corralation between Citi Trends and Middlebury National

Given the investment horizon of 90 days Citi Trends is expected to generate 1.01 times less return on investment than Middlebury National. In addition to that, Citi Trends is 2.0 times more volatile than Middlebury National. It trades about 0.17 of its total potential returns per unit of risk. Middlebury National is currently generating about 0.34 per unit of volatility. If you would invest  2,451  in Middlebury National on September 26, 2024 and sell it today you would earn a total of  1,049  from holding Middlebury National or generate 42.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Citi Trends  vs.  Middlebury National

Citi Trends

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Citi Trends displayed solid returns over the last few months and may actually be approaching a breakup point.

Middlebury National

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Middlebury National are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Middlebury National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citi Trends and Middlebury National

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

The idea behind Citi Trends and Middlebury National 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.