Correlation Between RLJ Lodging and Cingulate

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

Diversification Opportunities for RLJ Lodging and Cingulate

0.08

Correlation Coefficient

RLJ Lodging  Cingulate

Significant diversification

The 3 months correlation between RLJ and Cingulate is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate 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 Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Cingulate go up and down completely randomly.

Pair Corralation between RLJ Lodging and Cingulate

Assuming the 90 days trading horizon RLJ Lodging is expected to generate 13.51 times less return on investment than Cingulate. But when comparing it to its historical volatility, RLJ Lodging Trust is 13.29 times less risky than Cingulate. It trades about 0.09 of its potential returns per unit of risk. Cingulate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  370.00  in Cingulate on September 5, 2025 and sell it today you would earn a total of  24.00  from holding Cingulate or generate 6.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

RLJ Lodging Trust  vs.  Cingulate

RLJ Lodging Trust

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in RLJ Lodging Trust are ranked lower than 8 (%) 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.

Cingulate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cingulate is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RLJ Lodging and Cingulate

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

The idea behind RLJ Lodging Trust and Cingulate 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.