Correlation Between RLJ Lodging and 629377CP5

Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and 629377CP5 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 629377CP5 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 US629377CP59, you can compare the effects of market volatilities on RLJ Lodging and 629377CP5 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 629377CP5. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and 629377CP5.

Diversification Opportunities for RLJ Lodging and 629377CP5

-0.34

Correlation Coefficient

RLJ Lodging  629377CP5

Very good diversification

The 3 months correlation between RLJ and 629377CP5 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and US629377CP59 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US629377CP59 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 629377CP5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US629377CP59 has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and 629377CP5 go up and down completely randomly.

Pair Corralation between RLJ Lodging and 629377CP5

Assuming the 90 days trading horizon RLJ Lodging Trust is expected to generate 0.35 times more return on investment than 629377CP5. However, RLJ Lodging Trust is 2.89 times less risky than 629377CP5. It trades about 0.03 of its potential returns per unit of risk. US629377CP59 is currently generating about -0.09 per unit of risk. If you would invest  2,516  in RLJ Lodging Trust on October 26, 2024 and sell it today you would earn a total of  18.00  from holding RLJ Lodging Trust or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.33%
Values	Daily Returns

RLJ Lodging Trust  vs.  US629377CP59

RLJ Lodging Trust

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RLJ Lodging Trust are ranked lower than 2 (%) 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.

US629377CP59

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US629377CP59 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US629377CP59 investors.

Pair Trading with RLJ Lodging and 629377CP5

The main advantage of trading using opposite RLJ Lodging and 629377CP5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, 629377CP5 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 629377CP5 will offset losses from the drop in 629377CP5's long position.

The idea behind RLJ Lodging Trust and US629377CP59 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.