Correlation Between RLJ Lodging and Mamas Creations
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Mamas Creations 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 RLJ Lodging and Mamas Creations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLJ Lodging Trust and Mamas Creations, you can compare the effects of market volatilities on RLJ Lodging and Mamas Creations 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 RLJ Lodging with a short position of Mamas Creations. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Mamas Creations.
Diversification Opportunities for RLJ Lodging and Mamas Creations
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RLJ and Mamas is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations and RLJ Lodging 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 RLJ Lodging Trust are associated (or correlated) with Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Mamas Creations go up and down completely randomly.
Pair Corralation between RLJ Lodging and Mamas Creations
Assuming the 90 days trading horizon RLJ Lodging is expected to generate 2.84 times less return on investment than Mamas Creations. But when comparing it to its historical volatility, RLJ Lodging Trust is 7.05 times less risky than Mamas Creations. It trades about 0.15 of its potential returns per unit of risk. Mamas Creations is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 756.00 in Mamas Creations on October 25, 2024 and sell it today you would earn a total of 23.00 from holding Mamas Creations or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Mamas Creations
Performance |
| Timeline |
| RLJ Lodging Trust |
| Mamas Creations |
RLJ Lodging and Mamas Creations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Mamas Creations
The main advantage of trading using opposite RLJ Lodging and Mamas Creations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Mamas Creations 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 Mamas Creations will offset losses from the drop in Mamas Creations' long position.| RLJ Lodging vs. Diamondrock Hospitality | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Sunstone Hotel Investors |
| Mamas Creations vs. Ingredion Incorporated | Mamas Creations vs. Hanover Foods | Mamas Creations vs. BBB Foods | Mamas Creations vs. Harmony Gold Mining |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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