Correlation Between RLJ Lodging and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Pebblebrook Hotel 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 RLJ Lodging and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLJ Lodging Trust and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on RLJ Lodging and Pebblebrook Hotel 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 RLJ Lodging with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Pebblebrook Hotel.
Diversification Opportunities for RLJ Lodging and Pebblebrook Hotel
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RLJ and Pebblebrook is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Pebblebrook Hotel Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pebblebrook Hotel Trust and RLJ Lodging 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 RLJ Lodging Trust are associated (or correlated) with Pebblebrook Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pebblebrook Hotel Trust has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between RLJ Lodging and Pebblebrook Hotel
Considering the 90-day investment horizon RLJ Lodging Trust is expected to under-perform the Pebblebrook Hotel. But the stock apears to be less risky and, when comparing its historical volatility, RLJ Lodging Trust is 1.32 times less risky than Pebblebrook Hotel. The stock trades about -0.05 of its potential returns per unit of risk. The Pebblebrook Hotel Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,046 in Pebblebrook Hotel Trust on March 25, 2025 and sell it today you would lose (95.00) from holding Pebblebrook Hotel Trust or give up 9.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| RLJ Lodging Trust |
| Pebblebrook Hotel Trust |
RLJ Lodging and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Pebblebrook Hotel
The main advantage of trading using opposite RLJ Lodging and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Pebblebrook Hotel 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 Pebblebrook Hotel will offset losses from the drop in Pebblebrook Hotel's long position.| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Ryman Hospitality Properties |
| Pebblebrook Hotel vs. RLJ Lodging Trust | Pebblebrook Hotel vs. Sunstone Hotel Investors | Pebblebrook Hotel vs. Diamondrock Hospitality | Pebblebrook Hotel vs. Summit Hotel 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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