Correlation Between Citigroup and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Citigroup and Host Hotels 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 Citigroup and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Host Hotels Resorts, you can compare the effects of market volatilities on Citigroup and Host Hotels 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 Citigroup with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Host Hotels.
Diversification Opportunities for Citigroup and Host Hotels
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Host is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and Citigroup 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 Citigroup are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Citigroup i.e., Citigroup and Host Hotels go up and down completely randomly.
Pair Corralation between Citigroup and Host Hotels
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.26 times more return on investment than Host Hotels. However, Citigroup is 1.26 times more volatile than Host Hotels Resorts. It trades about 0.07 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.03 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
Citigroup vs. Host Hotels Resorts
Performance |
| Timeline |
| Citigroup |
| Host Hotels Resorts |
Citigroup and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Host Hotels
The main advantage of trading using opposite Citigroup and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Host Hotels vs. Greenroc Mining PLC | Host Hotels vs. Panther Metals PLC | Host Hotels vs. X FAB Silicon Foundries | Host Hotels vs. Endeavour Mining Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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