Correlation Between RLJ Lodging and Portillos
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Portillos 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 Portillos 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 Portillos, you can compare the effects of market volatilities on RLJ Lodging and Portillos 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 Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Portillos.
Diversification Opportunities for RLJ Lodging and Portillos
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RLJ and Portillos is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Portillos go up and down completely randomly.
Pair Corralation between RLJ Lodging and Portillos
Assuming the 90 days trading horizon RLJ Lodging is expected to generate 12.17 times less return on investment than Portillos. But when comparing it to its historical volatility, RLJ Lodging Trust is 7.97 times less risky than Portillos. It trades about 0.21 of its potential returns per unit of risk. Portillos is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 898.00 in Portillos on October 20, 2024 and sell it today you would earn a total of 276.00 from holding Portillos or generate 30.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Portillos
Performance |
| Timeline |
| RLJ Lodging Trust |
| Portillos |
RLJ Lodging and Portillos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Portillos
The main advantage of trading using opposite RLJ Lodging and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Portillos 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 Portillos will offset losses from the drop in Portillos' 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 |
| Portillos vs. Brinker International | Portillos vs. Bloomin Brands | Portillos vs. Wingstop | Portillos vs. Papa Johns International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |