Correlation Between Bt Brands and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Bt Brands 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 Bt Brands and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bt Brands and RLJ Lodging Trust, you can compare the effects of market volatilities on Bt Brands 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 Bt Brands with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and RLJ Lodging.
Diversification Opportunities for Bt Brands and RLJ Lodging
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between BTBD and RLJ is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands 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 Bt Brands 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 Bt Brands 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 Bt Brands i.e., Bt Brands and RLJ Lodging go up and down completely randomly.
Pair Corralation between Bt Brands and RLJ Lodging
Given the investment horizon of 90 days Bt Brands is expected to generate 3.58 times more return on investment than RLJ Lodging. However, Bt Brands is 3.58 times more volatile than RLJ Lodging Trust. It trades about 0.02 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about 0.0 per unit of risk. If you would invest 207.00 in Bt Brands on September 2, 2024 and sell it today you would lose (55.00) from holding Bt Brands or give up 26.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bt Brands vs. RLJ Lodging Trust
Performance |
| Timeline |
| Bt Brands |
| RLJ Lodging Trust |
Bt Brands and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bt Brands and RLJ Lodging
The main advantage of trading using opposite Bt Brands and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt Brands 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.| Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons PLC |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |