Correlation Between Tillys and Citi Trends

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

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

Diversification Opportunities for Tillys and Citi Trends

0.9

Correlation Coefficient

Tillys  Citi Trends

Almost no diversification

The 3 months correlation between Tillys and Citi is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tillys Inc and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Tillys 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 Tillys Inc 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 Tillys i.e., Tillys and Citi Trends go up and down completely randomly.

Pair Corralation between Tillys and Citi Trends

Given the investment horizon of 90 days Tillys Inc is expected to under-perform the Citi Trends. But the stock apears to be less risky and, when comparing its historical volatility, Tillys Inc is 1.29 times less risky than Citi Trends. The stock trades about -0.04 of its potential returns per unit of risk. The Citi Trends is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,559  in Citi Trends on February 3, 2024 and sell it today you would earn a total of  651.00  from holding Citi Trends or generate 41.76% return on investment over 90 days.

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

Tillys Inc  vs.  Citi Trends

Tillys Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tillys Inc 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 basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Citi Trends

Risk-Adjusted Performance

0 of 100

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 June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tillys and Citi Trends

The main advantage of trading using opposite Tillys and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tillys 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 Tillys Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.