Correlation Between RLJ Lodging and Braemar Hotel
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Braemar Hotel 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 Braemar Hotel 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 Braemar Hotel Resorts, you can compare the effects of market volatilities on RLJ Lodging and Braemar Hotel 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 Braemar Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Braemar Hotel.
Diversification Opportunities for RLJ Lodging and Braemar Hotel
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RLJ and Braemar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Braemar Hotel Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braemar Hotel Resorts 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 Braemar Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braemar Hotel Resorts has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Braemar Hotel go up and down completely randomly.
Pair Corralation between RLJ Lodging and Braemar Hotel
Considering the 90-day investment horizon RLJ Lodging is expected to generate 88.56 times less return on investment than Braemar Hotel. But when comparing it to its historical volatility, RLJ Lodging Trust is 2.58 times less risky than Braemar Hotel. It trades about 0.0 of its potential returns per unit of risk. Braemar Hotel Resorts is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 211.00 in Braemar Hotel Resorts on September 3, 2024 and sell it today you would earn a total of 148.00 from holding Braemar Hotel Resorts or generate 70.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Braemar Hotel Resorts
Performance |
| Timeline |
| RLJ Lodging Trust |
| Braemar Hotel Resorts |
RLJ Lodging and Braemar Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Braemar Hotel
The main advantage of trading using opposite RLJ Lodging and Braemar Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Braemar Hotel 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 Braemar Hotel will offset losses from the drop in Braemar Hotel'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 |
| Braemar Hotel vs. Summit Hotel Properties | Braemar Hotel vs. Service Properties Trust | Braemar Hotel vs. InnSuites Hospitality Trust | Braemar Hotel vs. Sotherly Hotels PR |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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