Correlation Between Citigroup and Chesapeake Lodging

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

By analyzing existing cross correlation between Citigroup and Chesapeake Lodging Trust, you can compare the effects of market volatilities on Citigroup and Chesapeake Lodging 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 Chesapeake Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Chesapeake Lodging.

Diversification Opportunities for Citigroup and Chesapeake Lodging

0.0

Correlation Coefficient

Citigroup  Chesapeake Lodging

Pay attention - limited upside

The 3 months correlation between Citigroup and Chesapeake is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Chesapeake Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Lodging Trust 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 Chesapeake Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Lodging Trust has no effect on the direction of Citigroup i.e., Citigroup and Chesapeake Lodging go up and down completely randomly.

Pair Corralation between Citigroup and Chesapeake Lodging

If you would invest  4,381  in Citigroup on September 30, 2024 and sell it today you would earn a total of  2,719  from holding Citigroup or generate 62.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Chesapeake Lodging Trust

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chesapeake Lodging Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Lodging Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Chesapeake Lodging is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and Chesapeake Lodging

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

The idea behind Citigroup and Chesapeake Lodging Trust 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.