Correlation Between RLJ Lodging and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Xenia Hotels 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 Xenia Hotels 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 Xenia Hotels Resorts, you can compare the effects of market volatilities on RLJ Lodging and Xenia Hotels 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 Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Xenia Hotels.
Diversification Opportunities for RLJ Lodging and Xenia Hotels
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RLJ and Xenia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts 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 Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Xenia Hotels go up and down completely randomly.
Pair Corralation between RLJ Lodging and Xenia Hotels
Considering the 90-day investment horizon RLJ Lodging Trust is expected to generate 0.86 times more return on investment than Xenia Hotels. However, RLJ Lodging Trust is 1.16 times less risky than Xenia Hotels. It trades about 0.3 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.17 per unit of risk. If you would invest 907.00 in RLJ Lodging Trust on August 28, 2024 and sell it today you would earn a total of 101.00 from holding RLJ Lodging Trust or generate 11.14% 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. Xenia Hotels Resorts
Performance |
| Timeline |
| RLJ Lodging Trust |
| Xenia Hotels Resorts |
RLJ Lodging and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Xenia Hotels
The main advantage of trading using opposite RLJ Lodging and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Xenia Hotels 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' 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 |
| Xenia Hotels vs. RLJ Lodging Trust | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. Pebblebrook Hotel Trust | Xenia Hotels vs. Summit Hotel Properties |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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