Correlation Between ARB IOT and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both ARB IOT 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 ARB IOT and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARB IOT Group and RLJ Lodging Trust, you can compare the effects of market volatilities on ARB IOT 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 ARB IOT with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARB IOT and RLJ Lodging.
Diversification Opportunities for ARB IOT and RLJ Lodging
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ARB and RLJ is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group 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 ARB IOT 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 ARB IOT Group 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 ARB IOT i.e., ARB IOT and RLJ Lodging go up and down completely randomly.
Pair Corralation between ARB IOT and RLJ Lodging
Given the investment horizon of 90 days ARB IOT Group is expected to generate 9.9 times more return on investment than RLJ Lodging. However, ARB IOT is 9.9 times more volatile than RLJ Lodging Trust. It trades about 0.11 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about 0.1 per unit of risk. If you would invest 31.00 in ARB IOT Group on September 2, 2024 and sell it today you would earn a total of 20.00 from holding ARB IOT Group or generate 64.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARB IOT Group vs. RLJ Lodging Trust
Performance |
| Timeline |
| ARB IOT Group |
| RLJ Lodging Trust |
ARB IOT and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARB IOT and RLJ Lodging
The main advantage of trading using opposite ARB IOT and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARB IOT 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.| ARB IOT vs. Formula Systems 1985 | ARB IOT vs. CSP Inc | ARB IOT vs. CLARIVATE PLC | ARB IOT vs. BigBearai Holdings |
| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Ryman Hospitality Properties |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |