Correlation Between RLJ Lodging and Bit Origin

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

Diversification Opportunities for RLJ Lodging and Bit Origin

0.67

Correlation Coefficient

RLJ Lodging  Bit Origin

Poor diversification

The 3 months correlation between RLJ and Bit is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Bit Origin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bit Origin 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 Bit Origin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bit Origin has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Bit Origin go up and down completely randomly.

Pair Corralation between RLJ Lodging and Bit Origin

Considering the 90-day investment horizon RLJ Lodging is expected to generate 29.13 times less return on investment than Bit Origin. But when comparing it to its historical volatility, RLJ Lodging Trust is 9.88 times less risky than Bit Origin. It trades about 0.04 of its potential returns per unit of risk. Bit Origin is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Bit Origin on May 2, 2025 and sell it today you would earn a total of  20.00  from holding Bit Origin or generate 105.26% return on investment over 90 days.

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

RLJ Lodging Trust  vs.  Bit Origin

RLJ Lodging Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RLJ Lodging Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady essential indicators, RLJ Lodging is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Bit Origin

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bit Origin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bit Origin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RLJ Lodging and Bit Origin

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

The idea behind RLJ Lodging Trust and Bit Origin 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.