Correlation Between Pebblebrook Hotel and TOWNSQUARE MEDIA

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

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

Diversification Opportunities for Pebblebrook Hotel and TOWNSQUARE MEDIA

0.87

Correlation Coefficient

Pebblebrook Hotel  TOWNSQUARE MEDIA

Very poor diversification

The 3 months correlation between Pebblebrook and TOWNSQUARE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and TOWNSQUARE MEDIA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOWNSQUARE MEDIA INC and Pebblebrook Hotel 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 Pebblebrook Hotel Trust are associated (or correlated) with TOWNSQUARE MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOWNSQUARE MEDIA INC has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and TOWNSQUARE MEDIA go up and down completely randomly.

Pair Corralation between Pebblebrook Hotel and TOWNSQUARE MEDIA

Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the TOWNSQUARE MEDIA. But the stock apears to be less risky and, when comparing its historical volatility, Pebblebrook Hotel Trust is 1.2 times less risky than TOWNSQUARE MEDIA. The stock trades about -0.24 of its potential returns per unit of risk. The TOWNSQUARE MEDIA INC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  860.00  in TOWNSQUARE MEDIA INC on December 30, 2024 and sell it today you would lose (95.00) from holding TOWNSQUARE MEDIA INC or give up 11.05% of portfolio value over 90 days.

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

Pebblebrook Hotel Trust  vs.  TOWNSQUARE MEDIA INC

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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOWNSQUARE MEDIA INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Pebblebrook Hotel and TOWNSQUARE MEDIA

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

The idea behind Pebblebrook Hotel Trust and TOWNSQUARE MEDIA INC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.