Correlation Between Industria and Citi Trends

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

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

Diversification Opportunities for Industria and Citi Trends

-0.5

Correlation Coefficient

Industria  Citi Trends

Very good diversification

The 3 months correlation between Industria and Citi is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Industria 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 Industria de Diseno 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 Industria i.e., Industria and Citi Trends go up and down completely randomly.

Pair Corralation between Industria and Citi Trends

Assuming the 90 days horizon Industria de Diseno is expected to under-perform the Citi Trends. But the pink sheet apears to be less risky and, when comparing its historical volatility, Industria de Diseno is 1.82 times less risky than Citi Trends. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Citi Trends is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,523  in Citi Trends on October 12, 2024 and sell it today you would earn a total of  94.00  from holding Citi Trends or generate 3.73% return on investment over 90 days.

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

Industria de Diseno  vs.  Citi Trends

Industria de Diseno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 conflicting basic indicators, Citi Trends displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industria and Citi Trends

The main advantage of trading using opposite Industria and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria 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 Industria de Diseno 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.