Correlation Between Liberty Latin and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Liberty Latin 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 Liberty Latin and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Latin America and RLJ Lodging Trust, you can compare the effects of market volatilities on Liberty Latin 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 Liberty Latin with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Latin and RLJ Lodging.
Diversification Opportunities for Liberty Latin and RLJ Lodging
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Liberty and RLJ is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Latin America 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 Liberty Latin 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 Liberty Latin America 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 Liberty Latin i.e., Liberty Latin and RLJ Lodging go up and down completely randomly.
Pair Corralation between Liberty Latin and RLJ Lodging
Given the investment horizon of 90 days Liberty Latin America is expected to under-perform the RLJ Lodging. In addition to that, Liberty Latin is 1.94 times more volatile than RLJ Lodging Trust. It trades about -0.05 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Latin America vs. RLJ Lodging Trust
Performance |
| Timeline |
| Liberty Latin America |
| RLJ Lodging Trust |
Liberty Latin and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Latin and RLJ Lodging
The main advantage of trading using opposite Liberty Latin and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Latin 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.| Liberty Latin vs. Liberty Global PLC | Liberty Latin vs. Liberty Global PLC | Liberty Latin vs. Liberty Broadband Srs | Liberty Latin vs. KT Corporation |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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