Correlation Between VICI Properties and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both VICI Properties 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 VICI Properties and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VICI Properties and RLJ Lodging Trust, you can compare the effects of market volatilities on VICI Properties 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 VICI Properties with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of VICI Properties and RLJ Lodging.
Diversification Opportunities for VICI Properties and RLJ Lodging
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VICI and RLJ is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding VICI 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 VICI Properties 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 VICI 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 VICI Properties i.e., VICI Properties and RLJ Lodging go up and down completely randomly.
Pair Corralation between VICI Properties and RLJ Lodging
Given the investment horizon of 90 days VICI Properties is expected to generate 0.75 times more return on investment than RLJ Lodging. However, VICI Properties is 1.33 times less risky than RLJ Lodging. It trades about 0.0 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about -0.01 per unit of risk. If you would invest 3,101 in VICI Properties on November 2, 2024 and sell it today you would lose (117.00) from holding VICI Properties or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
VICI Properties vs. RLJ Lodging Trust
Performance |
| Timeline |
| VICI Properties |
| RLJ Lodging Trust |
VICI Properties and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VICI Properties and RLJ Lodging
The main advantage of trading using opposite VICI Properties and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VICI Properties 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.| VICI Properties vs. Broadstone Net Lease | VICI Properties vs. Armada Hflr Pr | VICI Properties vs. Brightspire Capital | VICI Properties vs. Safehold |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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