Correlation Between Barings BDC and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Barings BDC 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 Barings BDC and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and RLJ Lodging Trust, you can compare the effects of market volatilities on Barings BDC 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 Barings BDC with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and RLJ Lodging.
Diversification Opportunities for Barings BDC and RLJ Lodging
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and RLJ is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC 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 Barings BDC 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 Barings BDC 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 Barings BDC i.e., Barings BDC and RLJ Lodging go up and down completely randomly.
Pair Corralation between Barings BDC and RLJ Lodging
Given the investment horizon of 90 days Barings BDC is expected to generate 2.39 times less return on investment than RLJ Lodging. But when comparing it to its historical volatility, Barings BDC is 1.85 times less risky than RLJ Lodging. It trades about 0.08 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 926.00 in RLJ Lodging Trust on September 2, 2024 and sell it today you would earn a total of 95.00 from holding RLJ Lodging Trust or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. RLJ Lodging Trust
Performance |
| Timeline |
| Barings BDC |
| RLJ Lodging Trust |
Barings BDC and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and RLJ Lodging
The main advantage of trading using opposite Barings BDC and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC 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.| Barings BDC vs. Visa Class A | Barings BDC vs. Diamond Hill Investment | Barings BDC vs. Distoken Acquisition | Barings BDC vs. Associated Capital Group |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |