Correlation Between High-yield Municipal and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal 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 High-yield Municipal and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and RLJ Lodging Trust, you can compare the effects of market volatilities on High-yield Municipal 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 High-yield Municipal with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and RLJ Lodging.
Diversification Opportunities for High-yield Municipal and RLJ Lodging
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High-yield and RLJ is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund 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 High-yield Municipal 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 High Yield Municipal Fund 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 High-yield Municipal i.e., High-yield Municipal and RLJ Lodging go up and down completely randomly.
Pair Corralation between High-yield Municipal and RLJ Lodging
Assuming the 90 days horizon High-yield Municipal is expected to generate 1.55 times less return on investment than RLJ Lodging. But when comparing it to its historical volatility, High Yield Municipal Fund is 2.14 times less risky than RLJ Lodging. It trades about 0.1 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,351 in RLJ Lodging Trust on August 27, 2024 and sell it today you would earn a total of 164.00 from holding RLJ Lodging Trust or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. RLJ Lodging Trust
Performance |
| Timeline |
| High Yield Municipal |
| RLJ Lodging Trust |
High-yield Municipal and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and RLJ Lodging
The main advantage of trading using opposite High-yield Municipal and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal 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.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| RLJ Lodging vs. Ashford Hospitality Trust | RLJ Lodging vs. Braemar Hotels Resorts | RLJ Lodging vs. Braemar Hotels Resorts | RLJ Lodging vs. Aspen Digital |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |