Correlation Between Southland Holdings and Citi Trends

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

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

Diversification Opportunities for Southland Holdings and Citi Trends

0.09

Correlation Coefficient

Southland Holdings  Citi Trends

Significant diversification

The 3 months correlation between Southland and Citi is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Southland Holdings and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Southland Holdings 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 Southland Holdings 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 Southland Holdings i.e., Southland Holdings and Citi Trends go up and down completely randomly.

Pair Corralation between Southland Holdings and Citi Trends

Given the investment horizon of 90 days Southland Holdings is expected to generate 0.86 times more return on investment than Citi Trends. However, Southland Holdings is 1.16 times less risky than Citi Trends. It trades about -0.03 of its potential returns per unit of risk. Citi Trends is currently generating about -0.05 per unit of risk. If you would invest  349.00  in Southland Holdings on December 29, 2024 and sell it today you would lose (29.00) from holding Southland Holdings or give up 8.31% of portfolio value over 90 days.

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

Southland Holdings  vs.  Citi Trends

Southland Holdings

Risk-Adjusted Performance

Very Weak

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

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 latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Southland Holdings and Citi Trends

The main advantage of trading using opposite Southland Holdings and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southland Holdings 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 Southland Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.