Correlation Between RLJ Lodging and Altisource Asset
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Altisource Asset 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 Altisource Asset 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 Altisource Asset Management, you can compare the effects of market volatilities on RLJ Lodging and Altisource Asset 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 Altisource Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Altisource Asset.
Diversification Opportunities for RLJ Lodging and Altisource Asset
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RLJ and Altisource is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Altisource Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altisource Asset Man 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 Altisource Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altisource Asset Man has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Altisource Asset go up and down completely randomly.
Pair Corralation between RLJ Lodging and Altisource Asset
Considering the 90-day investment horizon RLJ Lodging Trust is expected to under-perform the Altisource Asset. But the stock apears to be less risky and, when comparing its historical volatility, RLJ Lodging Trust is 8.82 times less risky than Altisource Asset. The stock trades about 0.0 of its potential returns per unit of risk. The Altisource Asset Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 656.00 in Altisource Asset Management on September 3, 2024 and sell it today you would lose (540.00) from holding Altisource Asset Management or give up 82.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 89.49% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Altisource Asset Management
Performance |
| Timeline |
| RLJ Lodging Trust |
| Altisource Asset Man |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
RLJ Lodging and Altisource Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Altisource Asset
The main advantage of trading using opposite RLJ Lodging and Altisource Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Altisource Asset 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 Altisource Asset will offset losses from the drop in Altisource Asset's long position.| RLJ Lodging vs. Sotherly Hotels | RLJ Lodging vs. Service Properties Trust | RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Ryman Hospitality Properties |
| Altisource Asset vs. Abrdn Emerging Markets | Altisource Asset vs. DWS Municipal Income | Altisource Asset vs. Blackrock Muni Intermediate | Altisource Asset vs. Blackrock Muniyield |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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