Correlation Between Crown Castle and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Crown Castle 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 Crown Castle and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Castle and RLJ Lodging Trust, you can compare the effects of market volatilities on Crown Castle 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 Crown Castle with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Castle and RLJ Lodging.
Diversification Opportunities for Crown Castle and RLJ Lodging
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crown and RLJ is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Crown Castle 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 Crown Castle 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 Crown Castle 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 Crown Castle i.e., Crown Castle and RLJ Lodging go up and down completely randomly.
Pair Corralation between Crown Castle and RLJ Lodging
Considering the 90-day investment horizon Crown Castle is expected to under-perform the RLJ Lodging. But the stock apears to be less risky and, when comparing its historical volatility, Crown Castle is 1.02 times less risky than RLJ Lodging. The stock trades about -0.04 of its potential returns per unit of risk. The RLJ Lodging Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,123 in RLJ Lodging Trust on November 2, 2024 and sell it today you would lose (137.00) from holding RLJ Lodging Trust or give up 12.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Crown Castle vs. RLJ Lodging Trust
Performance |
| Timeline |
| Crown Castle |
| RLJ Lodging Trust |
Crown Castle and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Castle and RLJ Lodging
The main advantage of trading using opposite Crown Castle and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Castle 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.| Crown Castle vs. Digital Realty Trust | Crown Castle vs. Equinix | Crown Castle vs. SBA Communications Corp | Crown Castle vs. Iron Mountain Incorporated |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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