Correlation Between Ziff Davis and Citi Trends

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

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

Diversification Opportunities for Ziff Davis and Citi Trends

0.86

Correlation Coefficient

Ziff Davis  Citi Trends

Very poor diversification

The 3 months correlation between Ziff and Citi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends and Ziff Davis 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 Ziff Davis 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 Ziff Davis i.e., Ziff Davis and Citi Trends go up and down completely randomly.

Pair Corralation between Ziff Davis and Citi Trends

Allowing for the 90-day total investment horizon Ziff Davis is expected to under-perform the Citi Trends. But the stock apears to be less risky and, when comparing its historical volatility, Ziff Davis is 1.85 times less risky than Citi Trends. The stock trades about -0.03 of its potential returns per unit of risk. The Citi Trends is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,735  in Citi Trends on January 29, 2024 and sell it today you would lose (483.00) from holding Citi Trends or give up 17.66% of portfolio value over 90 days.

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

Ziff Davis  vs.  Citi Trends

Ziff Davis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ziff Davis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ziff Davis and Citi Trends

The main advantage of trading using opposite Ziff Davis and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ziff Davis 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 Ziff Davis 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.