Correlation Between RLJ Lodging and Keurig Dr
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Keurig Dr 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 Keurig Dr 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 Keurig Dr Pepper, you can compare the effects of market volatilities on RLJ Lodging and Keurig Dr 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 Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Keurig Dr.
Diversification Opportunities for RLJ Lodging and Keurig Dr
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RLJ and Keurig is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Keurig Dr go up and down completely randomly.
Pair Corralation between RLJ Lodging and Keurig Dr
Considering the 90-day investment horizon RLJ Lodging Trust is expected to under-perform the Keurig Dr. But the stock apears to be less risky and, when comparing its historical volatility, RLJ Lodging Trust is 1.52 times less risky than Keurig Dr. The stock trades about -0.36 of its potential returns per unit of risk. The Keurig Dr Pepper is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,134 in Keurig Dr Pepper on November 29, 2024 and sell it today you would earn a total of 240.00 from holding Keurig Dr Pepper or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Keurig Dr Pepper
Performance |
| Timeline |
| RLJ Lodging Trust |
| Keurig Dr Pepper |
RLJ Lodging and Keurig Dr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Keurig Dr
The main advantage of trading using opposite RLJ Lodging and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr'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 |
| Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Vita Coco | Keurig Dr vs. PepsiCo | Keurig Dr vs. Coca Cola Femsa SAB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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