Correlation Between Braemar Hotel and Citizens Community

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

By analyzing existing cross correlation between Braemar Hotel Resorts and Citizens Community Bancorp, you can compare the effects of market volatilities on Braemar Hotel and Citizens Community 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 Braemar Hotel with a short position of Citizens Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotel and Citizens Community.

Diversification Opportunities for Braemar Hotel and Citizens Community

0.04

Correlation Coefficient

Braemar Hotel  Citizens Community

Significant diversification

The 3 months correlation between Braemar and Citizens is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotel Resorts and Citizens Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Community and Braemar 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 Braemar Hotel Resorts are associated (or correlated) with Citizens Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Community has no effect on the direction of Braemar Hotel i.e., Braemar Hotel and Citizens Community go up and down completely randomly.

Pair Corralation between Braemar Hotel and Citizens Community

Considering the 90-day investment horizon Braemar Hotel Resorts is expected to under-perform the Citizens Community. In addition to that, Braemar Hotel is 2.04 times more volatile than Citizens Community Bancorp. It trades about -0.09 of its total potential returns per unit of risk. Citizens Community Bancorp is currently generating about -0.14 per unit of volatility. If you would invest  1,640  in Citizens Community Bancorp on December 26, 2024 and sell it today you would lose (189.00) from holding Citizens Community Bancorp or give up 11.52% of portfolio value over 90 days.

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

Braemar Hotel Resorts  vs.  Citizens Community Bancorp

Braemar Hotel Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Braemar Hotel Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Citizens Community

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Community Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Braemar Hotel and Citizens Community

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

The idea behind Braemar Hotel Resorts and Citizens Community Bancorp 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.