Correlation Between Brandywine Realty and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Brandywine Realty 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 Brandywine Realty and RLJ Lodging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brandywine Realty Trust and RLJ Lodging Trust, you can compare the effects of market volatilities on Brandywine Realty 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 Brandywine Realty with a short position of RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandywine Realty and RLJ Lodging.
Diversification Opportunities for Brandywine Realty and RLJ Lodging
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brandywine and RLJ is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust 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 Brandywine Realty 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 Brandywine Realty Trust 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 Brandywine Realty i.e., Brandywine Realty and RLJ Lodging go up and down completely randomly.
Pair Corralation between Brandywine Realty and RLJ Lodging
Considering the 90-day investment horizon Brandywine Realty Trust is expected to generate 0.67 times more return on investment than RLJ Lodging. However, Brandywine Realty Trust is 1.49 times less risky than RLJ Lodging. It trades about 0.03 of its potential returns per unit of risk. RLJ Lodging Trust is currently generating about -0.06 per unit of risk. If you would invest 439.00 in Brandywine Realty Trust on March 12, 2025 and sell it today you would earn a total of 11.00 from holding Brandywine Realty Trust or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandywine Realty Trust vs. RLJ Lodging Trust
Performance |
| Timeline |
| Brandywine Realty Trust |
| RLJ Lodging Trust |
Brandywine Realty and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandywine Realty and RLJ Lodging
The main advantage of trading using opposite Brandywine Realty and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandywine Realty 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.| Brandywine Realty vs. Douglas Emmett | Brandywine Realty vs. Kilroy Realty Corp | Brandywine Realty vs. Piedmont Office Realty | Brandywine Realty vs. City Office |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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