Correlation Between Q0954PVM1 and Citi Trends

Can any of the company-specific risk be diversified away by investing in both Q0954PVM1 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 Q0954PVM1 and Citi Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ANZ 6742 08 DEC 32 and Citi Trends, you can compare the effects of market volatilities on Q0954PVM1 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 Q0954PVM1 with a short position of Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q0954PVM1 and Citi Trends.

Diversification Opportunities for Q0954PVM1 and Citi Trends

0.2

Correlation Coefficient

Q0954PVM1  Citi Trends

Modest diversification

The 3 months correlation between Q0954PVM1 and Citi is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ANZ 6742 08 DEC 32 and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Q0954PVM1 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 ANZ 6742 08 DEC 32 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 Q0954PVM1 i.e., Q0954PVM1 and Citi Trends go up and down completely randomly.

Pair Corralation between Q0954PVM1 and Citi Trends

Assuming the 90 days trading horizon Q0954PVM1 is expected to generate 1.44 times less return on investment than Citi Trends. But when comparing it to its historical volatility, ANZ 6742 08 DEC 32 is 3.31 times less risky than Citi Trends. It trades about 0.04 of its potential returns per unit of risk. Citi Trends is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,389  in Citi Trends on December 2, 2024 and sell it today you would earn a total of  74.00  from holding Citi Trends or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	27.47%
Values	Daily Returns

ANZ 6742 08 DEC 32  vs.  Citi Trends

ANZ 6742 08

Risk-Adjusted Performance

Very Weak

Over the last 90 days ANZ 6742 08 DEC 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Q0954PVM1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Citi Trends

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 7 (%) 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 Q0954PVM1 and Citi Trends

The main advantage of trading using opposite Q0954PVM1 and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q0954PVM1 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 ANZ 6742 08 DEC 32 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.