Correlation Between RLJ Lodging and Telephone
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Telephone 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 Telephone 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 Telephone and Data, you can compare the effects of market volatilities on RLJ Lodging and Telephone 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 Telephone. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Telephone.
Diversification Opportunities for RLJ Lodging and Telephone
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RLJ and Telephone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Telephone go up and down completely randomly.
Pair Corralation between RLJ Lodging and Telephone
Considering the 90-day investment horizon RLJ Lodging is expected to generate 1278.67 times less return on investment than Telephone. But when comparing it to its historical volatility, RLJ Lodging Trust is 3.41 times less risky than Telephone. It trades about 0.0 of its potential returns per unit of risk. Telephone and Data is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 947.00 in Telephone and Data on September 2, 2024 and sell it today you would earn a total of 2,471 from holding Telephone and Data or generate 260.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Telephone and Data
Performance |
| Timeline |
| RLJ Lodging Trust |
| Telephone and Data |
RLJ Lodging and Telephone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Telephone
The main advantage of trading using opposite RLJ Lodging and Telephone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Telephone 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 Telephone will offset losses from the drop in Telephone'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 |
| Telephone vs. Telephone and Data | Telephone vs. Shenandoah Telecommunications Co | Telephone vs. WideOpenWest | Telephone vs. ATN International |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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