Correlation Between RLJ Lodging and Bt Brands
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Bt Brands 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 Bt Brands 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 Bt Brands, you can compare the effects of market volatilities on RLJ Lodging and Bt Brands 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 Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Bt Brands.
Diversification Opportunities for RLJ Lodging and Bt Brands
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between RLJ and BTBD is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Bt Brands go up and down completely randomly.
Pair Corralation between RLJ Lodging and Bt Brands
Considering the 90-day investment horizon RLJ Lodging Trust is expected to generate 0.37 times more return on investment than Bt Brands. However, RLJ Lodging Trust is 2.7 times less risky than Bt Brands. It trades about 0.1 of its potential returns per unit of risk. Bt Brands is currently generating about 0.01 per unit of risk. If you would invest 926.00 in RLJ Lodging Trust on September 2, 2024 and sell it today you would earn a total of 95.00 from holding RLJ Lodging Trust or generate 10.26% 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. Bt Brands
Performance |
| Timeline |
| RLJ Lodging Trust |
| Bt Brands |
RLJ Lodging and Bt Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Bt Brands
The main advantage of trading using opposite RLJ Lodging and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Ryman Hospitality Properties |
| Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons PLC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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