Correlation Between Citi Trends and Ralph Lauren

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

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

Diversification Opportunities for Citi Trends and Ralph Lauren

0.52

Correlation Coefficient

Citi Trends  Ralph Lauren

Very weak diversification

The 3 months correlation between Citi and Ralph is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Ralph Lauren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren Corp 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 Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren Corp has no effect on the direction of Citi Trends i.e., Citi Trends and Ralph Lauren go up and down completely randomly.

Pair Corralation between Citi Trends and Ralph Lauren

Given the investment horizon of 90 days Citi Trends is expected to under-perform the Ralph Lauren. In addition to that, Citi Trends is 1.54 times more volatile than Ralph Lauren Corp. It trades about -0.07 of its total potential returns per unit of risk. Ralph Lauren Corp is currently generating about -0.01 per unit of volatility. If you would invest  22,959  in Ralph Lauren Corp on December 23, 2024 and sell it today you would lose (556.00) from holding Ralph Lauren Corp or give up 2.42% 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.  Ralph Lauren Corp

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.

Ralph Lauren Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ralph Lauren Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Ralph Lauren is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citi Trends and Ralph Lauren

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

The idea behind Citi Trends and Ralph Lauren Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.