Correlation Between Kirklands and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Kirklands 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 Kirklands and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirklands and RLJ Lodging Trust, you can compare the effects of market volatilities on Kirklands 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 Kirklands with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirklands and RLJ Lodging.
Diversification Opportunities for Kirklands and RLJ Lodging
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kirklands and RLJ is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kirklands 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 Kirklands 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 Kirklands 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 Kirklands i.e., Kirklands and RLJ Lodging go up and down completely randomly.
Pair Corralation between Kirklands and RLJ Lodging
Given the investment horizon of 90 days Kirklands is expected to under-perform the RLJ Lodging. In addition to that, Kirklands is 2.62 times more volatile than RLJ Lodging Trust. It trades about -0.02 of its total potential returns per unit of risk. RLJ Lodging Trust is currently generating about 0.04 per unit of volatility. If you would invest 967.00 in RLJ Lodging Trust on September 2, 2024 and sell it today you would earn a total of 54.00 from holding RLJ Lodging Trust or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kirklands vs. RLJ Lodging Trust
Performance |
| Timeline |
| Kirklands |
| RLJ Lodging Trust |
Kirklands and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kirklands and RLJ Lodging
The main advantage of trading using opposite Kirklands and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirklands 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.| Kirklands vs. Purple Innovation | Kirklands vs. Mohawk Industries | Kirklands vs. La Z Boy Incorporated | Kirklands vs. Leggett Platt 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 CEOs Directory module to screen CEOs from public companies around the world.
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