Correlation Between Urban Edge and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Urban Edge and RLJ Lodging 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 Urban Edge and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Edge Properties and RLJ Lodging Trust, you can compare the effects of market volatilities on Urban Edge and RLJ Lodging 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 Urban Edge with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Edge and RLJ Lodging.
Diversification Opportunities for Urban Edge and RLJ Lodging
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Urban and RLJ is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and RLJ Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLJ Lodging Trust and Urban Edge 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 Urban Edge Properties are associated (or correlated) with RLJ Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLJ Lodging Trust has no effect on the direction of Urban Edge i.e., Urban Edge and RLJ Lodging go up and down completely randomly.
Pair Corralation between Urban Edge and RLJ Lodging
Allowing for the 90-day total investment horizon Urban Edge is expected to generate 4.14 times less return on investment than RLJ Lodging. But when comparing it to its historical volatility, Urban Edge Properties is 1.47 times less risky than RLJ Lodging. It trades about 0.16 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 885.00 in RLJ Lodging Trust on September 1, 2024 and sell it today you would earn a total of 136.00 from holding RLJ Lodging Trust or generate 15.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Urban Edge Properties vs. RLJ Lodging Trust
Performance |
| Timeline |
| Urban Edge Properties |
| RLJ Lodging Trust |
Urban Edge and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Edge and RLJ Lodging
The main advantage of trading using opposite Urban Edge and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Edge position performs unexpectedly, RLJ Lodging 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 RLJ Lodging will offset losses from the drop in RLJ Lodging's long position.| Urban Edge vs. Saul Centers | Urban Edge vs. Site Centers Corp | Urban Edge vs. Kite Realty Group | Urban Edge vs. Retail Opportunity Investments |
| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Ryman Hospitality 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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