Correlation Between Pebblebrook Hotel and Costco Wholesale

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

Diversification Opportunities for Pebblebrook Hotel and Costco Wholesale

0.23

Correlation Coefficient

Pebblebrook Hotel  Costco Wholesale

Modest diversification

The 3 months correlation between Pebblebrook and Costco is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Costco Wholesale go up and down completely randomly.

Pair Corralation between Pebblebrook Hotel and Costco Wholesale

Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the Costco Wholesale. In addition to that, Pebblebrook Hotel is 1.17 times more volatile than Costco Wholesale Corp. It trades about -0.25 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about -0.06 per unit of volatility. If you would invest  89,482  in Costco Wholesale Corp on December 24, 2024 and sell it today you would lose (6,092) from holding Costco Wholesale Corp or give up 6.81% of portfolio value over 90 days.

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

Pebblebrook Hotel Trust  vs.  Costco Wholesale Corp

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 uncertain 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.

Costco Wholesale Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Pebblebrook Hotel and Costco Wholesale

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

The idea behind Pebblebrook Hotel Trust and Costco Wholesale Corp 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.