Correlation Between Citi Trends and Encore Wire

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

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

Diversification Opportunities for Citi Trends and Encore Wire

0.0

Correlation Coefficient

Citi Trends  Encore Wire

Pay attention - limited upside

The 3 months correlation between Citi and Encore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Encore Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Wire 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 Encore Wire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Wire has no effect on the direction of Citi Trends i.e., Citi Trends and Encore Wire go up and down completely randomly.

Pair Corralation between Citi Trends and Encore Wire

If you would invest (100.00) in Encore Wire on December 25, 2024 and sell it today you would earn a total of  100.00  from holding Encore Wire or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citi Trends  vs.  Encore Wire

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.

Encore Wire

Risk-Adjusted Performance

Very Weak

Over the last 90 days Encore Wire has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Encore Wire is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citi Trends and Encore Wire

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

The idea behind Citi Trends and Encore Wire 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.