Correlation Between Altisource Asset and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Altisource Asset and RLJ 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 Altisource Asset and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altisource Asset Management and RLJ Lodging Trust, you can compare the effects of market volatilities on Altisource Asset and RLJ 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 Altisource Asset with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altisource Asset and RLJ Lodging.
Diversification Opportunities for Altisource Asset and RLJ Lodging
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Altisource and RLJ is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Altisource Asset Management and RLJ Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLJ Lodging Trust and Altisource Asset 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 Altisource Asset Management are associated (or correlated) with RLJ Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLJ Lodging Trust has no effect on the direction of Altisource Asset i.e., Altisource Asset and RLJ Lodging go up and down completely randomly.
Pair Corralation between Altisource Asset and RLJ Lodging
If you would invest 885.00 in RLJ Lodging Trust on September 1, 2024 and sell it today you would earn a total of 136.00 from holding RLJ Lodging Trust or generate 15.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Altisource Asset Management vs. RLJ Lodging Trust
Performance |
| Timeline |
| Altisource Asset Man |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| RLJ Lodging Trust |
Altisource Asset and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altisource Asset and RLJ Lodging
The main advantage of trading using opposite Altisource Asset and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altisource Asset position performs unexpectedly, RLJ 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 RLJ Lodging will offset losses from the drop in RLJ Lodging's long position.| Altisource Asset vs. Abrdn Emerging Markets | Altisource Asset vs. DWS Municipal Income | Altisource Asset vs. Blackrock Muni Intermediate | Altisource Asset vs. Blackrock Muniyield |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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