Correlation Between RLJ Lodging and Stratasys
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Stratasys 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 Stratasys 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 Stratasys, you can compare the effects of market volatilities on RLJ Lodging and Stratasys 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 Stratasys. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Stratasys.
Diversification Opportunities for RLJ Lodging and Stratasys
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RLJ and Stratasys is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Stratasys go up and down completely randomly.
Pair Corralation between RLJ Lodging and Stratasys
Considering the 90-day investment horizon RLJ Lodging Trust is expected to generate 0.47 times more return on investment than Stratasys. However, RLJ Lodging Trust is 2.14 times less risky than Stratasys. It trades about 0.01 of its potential returns per unit of risk. Stratasys is currently generating about -0.02 per unit of risk. If you would invest 1,020 in RLJ Lodging Trust on August 31, 2024 and sell it today you would lose (6.00) from holding RLJ Lodging Trust or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Stratasys
Performance |
| Timeline |
| RLJ Lodging Trust |
| Stratasys |
RLJ Lodging and Stratasys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Stratasys
The main advantage of trading using opposite RLJ Lodging and Stratasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Stratasys 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 Stratasys will offset losses from the drop in Stratasys' 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 |
| Stratasys vs. RLJ Lodging Trust | Stratasys vs. Aquagold International | Stratasys vs. Stepstone Group | Stratasys vs. Morningstar Unconstrained Allocation |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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