Correlation Between Park Hotels and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Park 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 Park 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 Park Hotels Resorts and RLJ Lodging Trust, you can compare the effects of market volatilities on Park 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 Park Hotels with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and RLJ Lodging.
Diversification Opportunities for Park Hotels and RLJ Lodging
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and RLJ is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Park 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 Park 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 Park 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 Park Hotels i.e., Park Hotels and RLJ Lodging go up and down completely randomly.
Pair Corralation between Park Hotels and RLJ Lodging
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 3.63 times more return on investment than RLJ Lodging. However, Park Hotels is 3.63 times more volatile than RLJ Lodging Trust. It trades about 0.0 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about -0.04 per unit of risk. If you would invest 1,500 in Park Hotels Resorts on September 23, 2024 and sell it today you would lose (15.00) from holding Park Hotels Resorts or give up 1.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Park Hotels Resorts vs. RLJ Lodging Trust
Performance |
Timeline |
Park Hotels Resorts |
RLJ Lodging Trust |
Park Hotels and RLJ Lodging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Hotels and RLJ Lodging
The main advantage of trading using opposite Park Hotels and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park 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.Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Sunstone Hotel Investors |
RLJ Lodging vs. Ashford Hospitality Trust | RLJ Lodging vs. Braemar Hotels Resorts | RLJ Lodging vs. Ashford Hospitality Trust | RLJ Lodging vs. Braemar Hotels Resorts |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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