Correlation Between Kimco Realty and Pebblebrook Hotel

Can any of the company-specific risk be diversified away by investing in both Kimco Realty 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 Kimco Realty and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kimco Realty and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Kimco Realty 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 Kimco Realty with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimco Realty and Pebblebrook Hotel.

Diversification Opportunities for Kimco Realty and Pebblebrook Hotel

0.29

Correlation Coefficient

Kimco Realty  Pebblebrook Hotel

Modest diversification

The 3 months correlation between Kimco and Pebblebrook is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kimco Realty 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 Kimco Realty 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 Kimco Realty 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 Kimco Realty i.e., Kimco Realty and Pebblebrook Hotel go up and down completely randomly.

Pair Corralation between Kimco Realty and Pebblebrook Hotel

Assuming the 90 days trading horizon Kimco Realty is expected to generate 0.72 times more return on investment than Pebblebrook Hotel. However, Kimco Realty is 1.39 times less risky than Pebblebrook Hotel. It trades about 0.04 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.03 per unit of risk. If you would invest  1,751  in Kimco Realty on December 2, 2024 and sell it today you would earn a total of  373.00  from holding Kimco Realty or generate 21.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.75%
Values	Daily Returns

Kimco Realty  vs.  Pebblebrook Hotel Trust

Kimco Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kimco Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Kimco Realty is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pebblebrook Hotel Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pebblebrook Hotel Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Preferred Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kimco Realty and Pebblebrook Hotel

The main advantage of trading using opposite Kimco Realty and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimco Realty 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 Kimco Realty 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.