Correlation Between Xenia Hotels and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels 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 Xenia Hotels and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xenia Hotels Resorts and RLJ Lodging Trust, you can compare the effects of market volatilities on Xenia Hotels 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 Xenia Hotels with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and RLJ Lodging.
Diversification Opportunities for Xenia Hotels and RLJ Lodging
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xenia and RLJ is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts 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 Xenia Hotels 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 Xenia Hotels Resorts 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 Xenia Hotels i.e., Xenia Hotels and RLJ Lodging go up and down completely randomly.
Pair Corralation between Xenia Hotels and RLJ Lodging
Considering the 90-day investment horizon Xenia Hotels Resorts is expected to generate 3.8 times more return on investment than RLJ Lodging. However, Xenia Hotels is 3.8 times more volatile than RLJ Lodging Trust. It trades about 0.17 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about -0.09 per unit of risk. If you would invest 1,464 in Xenia Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 104.00 from holding Xenia Hotels Resorts or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. RLJ Lodging Trust
Performance |
| Timeline |
| Xenia Hotels Resorts |
| RLJ Lodging Trust |
Xenia Hotels and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and RLJ Lodging
The main advantage of trading using opposite Xenia Hotels and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels 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.| Xenia Hotels vs. RLJ Lodging Trust | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. Pebblebrook Hotel Trust | Xenia Hotels vs. Summit Hotel Properties |
| RLJ Lodging vs. Diamondrock Hospitality | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Sunstone Hotel Investors |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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