Correlation Between RLJ Lodging and SiriusPoint
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and SiriusPoint 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 SiriusPoint 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 SiriusPoint, you can compare the effects of market volatilities on RLJ Lodging and SiriusPoint 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 SiriusPoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and SiriusPoint.
Diversification Opportunities for RLJ Lodging and SiriusPoint
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RLJ and SiriusPoint is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and SiriusPoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiriusPoint 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 SiriusPoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiriusPoint has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and SiriusPoint go up and down completely randomly.
Pair Corralation between RLJ Lodging and SiriusPoint
Assuming the 90 days trading horizon RLJ Lodging is expected to generate 1.33 times less return on investment than SiriusPoint. But when comparing it to its historical volatility, RLJ Lodging Trust is 1.02 times less risky than SiriusPoint. It trades about 0.08 of its potential returns per unit of risk. SiriusPoint is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,988 in SiriusPoint on August 27, 2024 and sell it today you would earn a total of 535.00 from holding SiriusPoint or generate 26.91% 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. SiriusPoint
Performance |
| Timeline |
| RLJ Lodging Trust |
| SiriusPoint |
RLJ Lodging and SiriusPoint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and SiriusPoint
The main advantage of trading using opposite RLJ Lodging and SiriusPoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, SiriusPoint 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 SiriusPoint will offset losses from the drop in SiriusPoint's long position.| RLJ Lodging vs. Ashford Hospitality Trust | RLJ Lodging vs. Braemar Hotels Resorts | RLJ Lodging vs. Braemar Hotels Resorts | RLJ Lodging vs. Aspen Digital |
| SiriusPoint vs. RLJ Lodging Trust | SiriusPoint vs. Argo Group International | SiriusPoint vs. New York Mortgage | SiriusPoint vs. Aquagold 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |