Correlation Between Educational Development and Citi Trends

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

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

Diversification Opportunities for Educational Development and Citi Trends

-0.59

Correlation Coefficient

Educational Development  Citi Trends

Excellent diversification

The 3 months correlation between Educational and Citi is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Educational Development and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Educational Development 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 Educational Development are associated (or correlated) with Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of Educational Development i.e., Educational Development and Citi Trends go up and down completely randomly.

Pair Corralation between Educational Development and Citi Trends

Given the investment horizon of 90 days Educational Development is expected to under-perform the Citi Trends. In addition to that, Educational Development is 1.68 times more volatile than Citi Trends. It trades about -0.01 of its total potential returns per unit of risk. Citi Trends is currently generating about 0.01 per unit of volatility. If you would invest  2,917  in Citi Trends on September 25, 2024 and sell it today you would lose (332.00) from holding Citi Trends or give up 11.38% of portfolio value over 90 days.

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

Educational Development  vs.  Citi Trends

Educational Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Educational Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Citi Trends

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 12 (%) 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.

Pair Trading with Educational Development and Citi Trends

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

The idea behind Educational Development and Citi Trends 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.