Correlation Between Pebblebrook Hotel and NetApp

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

Diversification Opportunities for Pebblebrook Hotel and NetApp

0.51

Correlation Coefficient

Pebblebrook Hotel  NetApp

Very weak diversification

The 3 months correlation between Pebblebrook and NetApp is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp 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 NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and NetApp go up and down completely randomly.

Pair Corralation between Pebblebrook Hotel and NetApp

Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the NetApp. But the stock apears to be less risky and, when comparing its historical volatility, Pebblebrook Hotel Trust is 1.38 times less risky than NetApp. The stock trades about -0.25 of its potential returns per unit of risk. The NetApp Inc is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  11,116  in NetApp Inc on December 24, 2024 and sell it today you would lose (2,737) from holding NetApp Inc or give up 24.62% of portfolio value over 90 days.

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

Pebblebrook Hotel Trust  vs.  NetApp 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 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.

NetApp Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NetApp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pebblebrook Hotel and NetApp

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

The idea behind Pebblebrook Hotel Trust and NetApp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.