Correlation Between Tandy Leather and Citi Trends

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

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

Diversification Opportunities for Tandy Leather and Citi Trends

0.6

Correlation Coefficient

Tandy Leather  Citi Trends

Poor diversification

The 3 months correlation between Tandy and Citi is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Tandy Leather 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 Tandy Leather Factory 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 Tandy Leather i.e., Tandy Leather and Citi Trends go up and down completely randomly.

Pair Corralation between Tandy Leather and Citi Trends

Considering the 90-day investment horizon Tandy Leather Factory is expected to generate 0.73 times more return on investment than Citi Trends. However, Tandy Leather Factory is 1.37 times less risky than Citi Trends. It trades about -0.07 of its potential returns per unit of risk. Citi Trends is currently generating about -0.09 per unit of risk. If you would invest  350.00  in Tandy Leather Factory on December 27, 2024 and sell it today you would lose (45.00) from holding Tandy Leather Factory or give up 12.86% of portfolio value over 90 days.

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

Tandy Leather Factory  vs.  Citi Trends

Tandy Leather Factory

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tandy Leather Factory has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tandy Leather and Citi Trends

The main advantage of trading using opposite Tandy Leather and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandy Leather 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 Tandy Leather Factory 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.