Correlation Between Lulus Fashion and Citi Trends

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

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

Diversification Opportunities for Lulus Fashion and Citi Trends

-0.73

Correlation Coefficient

Lulus Fashion  Citi Trends

Pay attention - limited upside

The 3 months correlation between Lulus and Citi is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Lulus Fashion 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 Lulus Fashion Lounge 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 Lulus Fashion i.e., Lulus Fashion and Citi Trends go up and down completely randomly.

Pair Corralation between Lulus Fashion and Citi Trends

Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Citi Trends. In addition to that, Lulus Fashion is 1.74 times more volatile than Citi Trends. It trades about -0.03 of its total potential returns per unit of risk. Citi Trends is currently generating about 0.06 per unit of volatility. If you would invest  2,126  in Citi Trends on September 26, 2024 and sell it today you would earn a total of  470.00  from holding Citi Trends or generate 22.11% return on investment over 90 days.

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

Lulus Fashion Lounge  vs.  Citi Trends

Lulus Fashion Lounge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lulus Fashion Lounge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Citi Trends

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 13 (%) 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 Lulus Fashion and Citi Trends

The main advantage of trading using opposite Lulus Fashion and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion 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 Lulus Fashion Lounge 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.