Correlation Between NYSE Composite and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and RLJ Lodging Trust, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and RLJ Lodging.
Diversification Opportunities for NYSE Composite and RLJ Lodging
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and RLJ is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and RLJ Lodging go up and down completely randomly.
Pair Corralation between NYSE Composite and RLJ Lodging
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.23 times more return on investment than RLJ Lodging. However, NYSE Composite is 1.23 times more volatile than RLJ Lodging Trust. It trades about 0.24 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about -0.1 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 27, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. RLJ Lodging Trust
Performance |
| Timeline |
NYSE Composite and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
RLJ Lodging Trust
Pair trading matchups for RLJ Lodging
Pair Trading with NYSE Composite and RLJ Lodging
The main advantage of trading using opposite NYSE Composite and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| RLJ Lodging vs. Ashford Hospitality Trust | RLJ Lodging vs. Braemar Hotels Resorts | RLJ Lodging vs. Braemar Hotels Resorts | RLJ Lodging vs. Aspen Digital |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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