Correlation Between Summit Hotel and CITIGROUP

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

By analyzing existing cross correlation between Summit Hotel Properties and CITIGROUP FDG INC, you can compare the effects of market volatilities on Summit Hotel and CITIGROUP 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 Summit Hotel with a short position of CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and CITIGROUP.

Diversification Opportunities for Summit Hotel and CITIGROUP

0.14

Correlation Coefficient

Summit Hotel  CITIGROUP

Average diversification

The 3 months correlation between Summit and CITIGROUP is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and CITIGROUP FDG INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP FDG INC and Summit Hotel 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 Summit Hotel Properties are associated (or correlated) with CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP FDG INC has no effect on the direction of Summit Hotel i.e., Summit Hotel and CITIGROUP go up and down completely randomly.

Pair Corralation between Summit Hotel and CITIGROUP

Considering the 90-day investment horizon Summit Hotel Properties is expected to generate 2.67 times more return on investment than CITIGROUP. However, Summit Hotel is 2.67 times more volatile than CITIGROUP FDG INC. It trades about 0.16 of its potential returns per unit of risk. CITIGROUP FDG INC is currently generating about -0.38 per unit of risk. If you would invest  654.00  in Summit Hotel Properties on September 27, 2024 and sell it today you would earn a total of  43.00  from holding Summit Hotel Properties or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	27.27%
Values	Daily Returns

Summit Hotel Properties  vs.  CITIGROUP FDG INC

Summit Hotel Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Summit Hotel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CITIGROUP FDG INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIGROUP FDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Bond's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for CITIGROUP FDG INC private investors.

Pair Trading with Summit Hotel and CITIGROUP

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

The idea behind Summit Hotel Properties and CITIGROUP FDG INC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.