Correlation Between RLJ Lodging and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Morgan Advanced 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 Morgan Advanced 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 Morgan Advanced Materials, you can compare the effects of market volatilities on RLJ Lodging and Morgan Advanced 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 Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Morgan Advanced.
Diversification Opportunities for RLJ Lodging and Morgan Advanced
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between RLJ and Morgan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Morgan Advanced go up and down completely randomly.
Pair Corralation between RLJ Lodging and Morgan Advanced
Assuming the 90 days trading horizon RLJ Lodging Trust is expected to generate 0.25 times more return on investment than Morgan Advanced. However, RLJ Lodging Trust is 4.01 times less risky than Morgan Advanced. It trades about 0.02 of its potential returns per unit of risk. Morgan Advanced Materials is currently generating about -0.1 per unit of risk. If you would invest 2,489 in RLJ Lodging Trust on November 2, 2024 and sell it today you would earn a total of 29.00 from holding RLJ Lodging Trust or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Morgan Advanced Materials
Performance |
| Timeline |
| RLJ Lodging Trust |
| Morgan Advanced Materials |
RLJ Lodging and Morgan Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Morgan Advanced
The main advantage of trading using opposite RLJ Lodging and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's 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 |
| Morgan Advanced vs. Standex International | Morgan Advanced vs. Intevac | Morgan Advanced vs. Thermon Group Holdings | Morgan Advanced vs. Enpro Industries |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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