Correlation Between Arhaus and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Arhaus 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 Arhaus and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arhaus Inc and RLJ Lodging Trust, you can compare the effects of market volatilities on Arhaus 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 Arhaus with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and RLJ Lodging.
Diversification Opportunities for Arhaus and RLJ Lodging
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arhaus and RLJ is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc 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 Arhaus 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 Arhaus Inc 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 Arhaus i.e., Arhaus and RLJ Lodging go up and down completely randomly.
Pair Corralation between Arhaus and RLJ Lodging
Given the investment horizon of 90 days Arhaus Inc is expected to generate 3.82 times more return on investment than RLJ Lodging. However, Arhaus is 3.82 times more volatile than RLJ Lodging Trust. It trades about -0.07 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about -0.36 per unit of risk. If you would invest 1,193 in Arhaus Inc on November 29, 2024 and sell it today you would lose (98.00) from holding Arhaus Inc or give up 8.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arhaus Inc vs. RLJ Lodging Trust
Performance |
| Timeline |
| Arhaus Inc |
| RLJ Lodging Trust |
Arhaus and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arhaus and RLJ Lodging
The main advantage of trading using opposite Arhaus and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus 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.| Arhaus vs. Floor Decor Holdings | Arhaus vs. Live Ventures | Arhaus vs. Haverty Furniture Companies | Arhaus vs. Haverty Furniture Companies |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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