Correlation Between CHIBA BANK and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both CHIBA BANK 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 CHIBA BANK and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHIBA BANK and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on CHIBA BANK 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 CHIBA BANK with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHIBA BANK and Pebblebrook Hotel.
Diversification Opportunities for CHIBA BANK and Pebblebrook Hotel
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CHIBA and Pebblebrook is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CHIBA BANK 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 CHIBA BANK 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 CHIBA BANK 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 CHIBA BANK i.e., CHIBA BANK and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between CHIBA BANK and Pebblebrook Hotel
Assuming the 90 days trading horizon CHIBA BANK is expected to generate 1.0 times more return on investment than Pebblebrook Hotel. However, CHIBA BANK is 1.0 times less risky than Pebblebrook Hotel. It trades about 0.01 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.01 per unit of risk. If you would invest 715.00 in CHIBA BANK on October 4, 2024 and sell it today you would earn a total of 15.00 from holding CHIBA BANK or generate 2.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CHIBA BANK vs. Pebblebrook Hotel Trust
Performance |
Timeline |
CHIBA BANK |
Pebblebrook Hotel Trust |
CHIBA BANK and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHIBA BANK and Pebblebrook Hotel
The main advantage of trading using opposite CHIBA BANK and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHIBA BANK 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.The idea behind CHIBA BANK and Pebblebrook Hotel Trust 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.Pebblebrook Hotel vs. Gaztransport Technigaz SA | Pebblebrook Hotel vs. Gold Road Resources | Pebblebrook Hotel vs. Sims Metal Management | Pebblebrook Hotel vs. SIMS METAL MGT |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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