Correlation Between RLJ Lodging and Urban Edge
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Urban Edge 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 Urban Edge 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 Urban Edge Properties, you can compare the effects of market volatilities on RLJ Lodging and Urban Edge 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 Urban Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Urban Edge.
Diversification Opportunities for RLJ Lodging and Urban Edge
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RLJ and Urban is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Urban Edge Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Edge Properties 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 Urban Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Edge Properties has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Urban Edge go up and down completely randomly.
Pair Corralation between RLJ Lodging and Urban Edge
Considering the 90-day investment horizon RLJ Lodging Trust is expected to under-perform the Urban Edge. In addition to that, RLJ Lodging is 1.04 times more volatile than Urban Edge Properties. It trades about 0.0 of its total potential returns per unit of risk. Urban Edge Properties is currently generating about 0.07 per unit of volatility. If you would invest 1,413 in Urban Edge Properties on September 3, 2024 and sell it today you would earn a total of 848.00 from holding Urban Edge Properties or generate 60.01% 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. Urban Edge Properties
Performance |
| Timeline |
| RLJ Lodging Trust |
| Urban Edge Properties |
RLJ Lodging and Urban Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Urban Edge
The main advantage of trading using opposite RLJ Lodging and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Urban Edge 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 Urban Edge will offset losses from the drop in Urban Edge's long position.| RLJ Lodging vs. Sotherly Hotels | RLJ Lodging vs. Service Properties Trust | RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Ryman Hospitality Properties |
| Urban Edge vs. Saul Centers | Urban Edge vs. Site Centers Corp | Urban Edge vs. Kite Realty Group | Urban Edge vs. Retail Opportunity Investments |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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