Correlation Between Citi Trends and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Citi Trends and Summit Hotel 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 Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citi Trends and Summit Hotel Properties, you can compare the effects of market volatilities on Citi Trends and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citi Trends and Summit Hotel.
Diversification Opportunities for Citi Trends and Summit Hotel
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citi and Summit is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citi Trends and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Citi Trends i.e., Citi Trends and Summit Hotel go up and down completely randomly.
Pair Corralation between Citi Trends and Summit Hotel
Given the investment horizon of 90 days Citi Trends is expected to under-perform the Summit Hotel. In addition to that, Citi Trends is 1.42 times more volatile than Summit Hotel Properties. It trades about -0.02 of its total potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.01 per unit of volatility. If you would invest 734.00 in Summit Hotel Properties on August 24, 2024 and sell it today you would lose (111.00) from holding Summit Hotel Properties or give up 15.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citi Trends vs. Summit Hotel Properties
Performance |
| Timeline |
| Citi Trends |
| Summit Hotel Properties |
Citi Trends and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citi Trends and Summit Hotel
The main advantage of trading using opposite Citi Trends and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citi Trends position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| Citi Trends vs. JJill Inc | Citi Trends vs. Zumiez Inc | Citi Trends vs. Tillys Inc | Citi Trends vs. Duluth Holdings |
| Summit Hotel vs. Diamondrock Hospitality | Summit Hotel vs. RLJ Lodging Trust | Summit Hotel vs. Pebblebrook Hotel Trust | Summit Hotel vs. Sunstone Hotel Investors |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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