Correlation Between RLJ Lodging and Consolidated Communications

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

Diversification Opportunities for RLJ Lodging and Consolidated Communications

0.0

Correlation Coefficient

RLJ Lodging  Consolidated Communications

Pay attention - limited upside

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

Pair Corralation between RLJ Lodging and Consolidated Communications

If you would invest (100.00) in Consolidated Communications on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Consolidated Communications or generate -100.0% return on investment over 90 days.

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

RLJ Lodging Trust  vs.  Consolidated Communications

RLJ Lodging Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days RLJ Lodging Trust 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 essential indicators remain relatively steady which may send shares a bit higher in April 2025. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Consolidated Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consolidated Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Consolidated Communications is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with RLJ Lodging and Consolidated Communications

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

The idea behind RLJ Lodging Trust and Consolidated Communications 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.