Correlation Between Citi Trends and AltaGas

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

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

Diversification Opportunities for Citi Trends and AltaGas

-0.58

Correlation Coefficient

Citi Trends  AltaGas

Excellent diversification

The 3 months correlation between Citi and AltaGas is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and AltaGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltaGas and Citi Trends 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 Citi Trends are associated (or correlated) with AltaGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltaGas has no effect on the direction of Citi Trends i.e., Citi Trends and AltaGas go up and down completely randomly.

Pair Corralation between Citi Trends and AltaGas

Given the investment horizon of 90 days Citi Trends is expected to generate 3.04 times more return on investment than AltaGas. However, Citi Trends is 3.04 times more volatile than AltaGas. It trades about 0.17 of its potential returns per unit of risk. AltaGas is currently generating about -0.08 per unit of risk. If you would invest  1,850  in Citi Trends on September 27, 2024 and sell it today you would earn a total of  746.00  from holding Citi Trends or generate 40.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Citi Trends  vs.  AltaGas

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.

AltaGas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AltaGas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, AltaGas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citi Trends and AltaGas

The main advantage of trading using opposite Citi Trends and AltaGas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, AltaGas 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 AltaGas will offset losses from the drop in AltaGas' long position.

The idea behind Citi Trends and AltaGas 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.