Correlation Between RLJ Lodging and VHAI
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and VHAI 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 VHAI 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 VHAI, you can compare the effects of market volatilities on RLJ Lodging and VHAI 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 VHAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and VHAI.
Diversification Opportunities for RLJ Lodging and VHAI
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RLJ and VHAI is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI 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 VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and VHAI go up and down completely randomly.
Pair Corralation between RLJ Lodging and VHAI
If you would invest 2,471 in RLJ Lodging Trust on October 9, 2024 and sell it today you would earn a total of 51.00 from holding RLJ Lodging Trust or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
RLJ Lodging Trust vs. VHAI
Performance |
| Timeline |
| RLJ Lodging Trust |
| VHAI |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
RLJ Lodging and VHAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and VHAI
The main advantage of trading using opposite RLJ Lodging and VHAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, VHAI 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 VHAI will offset losses from the drop in VHAI'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 |
| VHAI vs. Old Dominion Freight | VHAI vs. Arq Inc | VHAI vs. Axalta Coating Systems | VHAI vs. TFI 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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