Correlation Between RLJ Lodging and Oportun Financial
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Oportun Financial 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 Oportun Financial 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 Oportun Financial Corp, you can compare the effects of market volatilities on RLJ Lodging and Oportun Financial 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 Oportun Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Oportun Financial.
Diversification Opportunities for RLJ Lodging and Oportun Financial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RLJ and Oportun is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Oportun Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oportun Financial 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 Oportun Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oportun Financial Corp has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Oportun Financial go up and down completely randomly.
Pair Corralation between RLJ Lodging and Oportun Financial
Considering the 90-day investment horizon RLJ Lodging is expected to generate 3.07 times less return on investment than Oportun Financial. But when comparing it to its historical volatility, RLJ Lodging Trust is 2.37 times less risky than Oportun Financial. It trades about 0.3 of its potential returns per unit of risk. Oportun Financial Corp is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 285.00 in Oportun Financial Corp on August 31, 2024 and sell it today you would earn a total of 110.00 from holding Oportun Financial Corp or generate 38.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Oportun Financial Corp
Performance |
| Timeline |
| RLJ Lodging Trust |
| Oportun Financial Corp |
RLJ Lodging and Oportun Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Oportun Financial
The main advantage of trading using opposite RLJ Lodging and Oportun Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Oportun Financial 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 Oportun Financial will offset losses from the drop in Oportun Financial's long position.| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Ryman Hospitality Properties | RLJ Lodging vs. Chatham Lodging Trust |
| Oportun Financial vs. Visa Class A | Oportun Financial vs. RLJ Lodging Trust | Oportun Financial vs. Aquagold International | Oportun Financial vs. Stepstone Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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