Correlation Between RLJ Lodging and Kura Sushi

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

By analyzing existing cross correlation between RLJ Lodging Trust and Kura Sushi USA, you can compare the effects of market volatilities on RLJ Lodging and Kura Sushi 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 RLJ Lodging with a short position of Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Kura Sushi.

Diversification Opportunities for RLJ Lodging and Kura Sushi

-0.56

Correlation Coefficient

RLJ Lodging  Kura Sushi

Excellent diversification

The 3 months correlation between RLJ and Kura is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA and RLJ Lodging 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 RLJ Lodging Trust are associated (or correlated) with Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Kura Sushi go up and down completely randomly.

Pair Corralation between RLJ Lodging and Kura Sushi

Assuming the 90 days trading horizon RLJ Lodging Trust is expected to generate 0.1 times more return on investment than Kura Sushi. However, RLJ Lodging Trust is 10.46 times less risky than Kura Sushi. It trades about 0.08 of its potential returns per unit of risk. Kura Sushi USA is currently generating about -0.22 per unit of risk. If you would invest  2,461  in RLJ Lodging Trust on December 19, 2024 and sell it today you would earn a total of  47.00  from holding RLJ Lodging Trust or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

RLJ Lodging Trust  vs.  Kura Sushi USA

RLJ Lodging Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RLJ Lodging Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, RLJ Lodging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Kura Sushi USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kura Sushi USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with RLJ Lodging and Kura Sushi

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

The idea behind RLJ Lodging Trust and Kura Sushi USA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.