Correlation Between RLJ Lodging and Critical Metals

Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Critical Metals 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 Critical Metals 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 Critical Metals Corp, you can compare the effects of market volatilities on RLJ Lodging and Critical Metals 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 Critical Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Critical Metals.

Diversification Opportunities for RLJ Lodging and Critical Metals

0.58

Correlation Coefficient

RLJ Lodging  Critical Metals

Very weak diversification

The 3 months correlation between RLJ and Critical is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp 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 Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Critical Metals go up and down completely randomly.

Pair Corralation between RLJ Lodging and Critical Metals

Assuming the 90 days trading horizon RLJ Lodging is expected to generate 30.69 times less return on investment than Critical Metals. But when comparing it to its historical volatility, RLJ Lodging Trust is 18.57 times less risky than Critical Metals. It trades about 0.18 of its potential returns per unit of risk. Critical Metals Corp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  298.00  in Critical Metals Corp on July 12, 2025 and sell it today you would earn a total of  1,173  from holding Critical Metals Corp or generate 393.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

RLJ Lodging Trust  vs.  Critical Metals Corp

RLJ Lodging Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RLJ Lodging Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, RLJ Lodging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Critical Metals Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Metals Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Critical Metals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RLJ Lodging and Critical Metals

The main advantage of trading using opposite RLJ Lodging and Critical Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Critical Metals 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 Critical Metals will offset losses from the drop in Critical Metals' long position.

The idea behind RLJ Lodging Trust and Critical Metals Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.