Correlation Between Fast Retailing and Citi Trends
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and Citi Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Citi Trends, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Citi Trends.
Diversification Opportunities for Fast Retailing and Citi Trends
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fast and Citi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and Citi Trends go up and down completely randomly.
Pair Corralation between Fast Retailing and Citi Trends
Assuming the 90 days horizon Fast Retailing is expected to generate 5.01 times less return on investment than Citi Trends. But when comparing it to its historical volatility, Fast Retailing Co is 4.18 times less risky than Citi Trends. It trades about 0.24 of its potential returns per unit of risk. Citi Trends is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,957 in Citi Trends on September 24, 2024 and sell it today you would earn a total of 566.00 from holding Citi Trends or generate 28.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fast Retailing Co vs. Citi Trends
Performance |
Timeline |
Fast Retailing |
Citi Trends |
Fast Retailing and Citi Trends Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fast Retailing and Citi Trends
The main advantage of trading using opposite Fast Retailing and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.Fast Retailing vs. Aritzia | Fast Retailing vs. Boot Barn Holdings | Fast Retailing vs. Guess Inc | Fast Retailing vs. The TJX Companies |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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