Correlation Between RLJ Lodging and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Chevron Corp 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 Chevron Corp 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 Chevron Corp, you can compare the effects of market volatilities on RLJ Lodging and Chevron Corp 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 Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Chevron Corp.
Diversification Opportunities for RLJ Lodging and Chevron Corp
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RLJ and Chevron is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp 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 Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Chevron Corp go up and down completely randomly.
Pair Corralation between RLJ Lodging and Chevron Corp
Considering the 90-day investment horizon RLJ Lodging Trust is expected to under-perform the Chevron Corp. But the stock apears to be less risky and, when comparing its historical volatility, RLJ Lodging Trust is 1.3 times less risky than Chevron Corp. The stock trades about -0.36 of its potential returns per unit of risk. The Chevron Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15,450 in Chevron Corp on November 29, 2024 and sell it today you would earn a total of 64.00 from holding Chevron Corp or generate 0.41% 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. Chevron Corp
Performance |
| Timeline |
| RLJ Lodging Trust |
| Chevron Corp |
RLJ Lodging and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Chevron Corp
The main advantage of trading using opposite RLJ Lodging and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's 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 |
| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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