Correlation Between Pebblebrook Hotel and Pebblebrook Hotel

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

Diversification Opportunities for Pebblebrook Hotel and Pebblebrook Hotel

0.99

Correlation Coefficient

Pebblebrook Hotel  Pebblebrook Hotel

No risk reduction

The 3 months correlation between Pebblebrook and Pebblebrook is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust 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 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 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 Pebblebrook Hotel i.e., Pebblebrook Hotel and Pebblebrook Hotel go up and down completely randomly.

Pair Corralation between Pebblebrook Hotel and Pebblebrook Hotel

Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 0.93 times more return on investment than Pebblebrook Hotel. However, Pebblebrook Hotel Trust is 1.08 times less risky than Pebblebrook Hotel. It trades about -0.26 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about -0.29 per unit of risk. If you would invest  2,152  in Pebblebrook Hotel Trust on December 2, 2024 and sell it today you would lose (285.00) from holding Pebblebrook Hotel Trust or give up 13.24% of portfolio value over 90 days.

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

Pebblebrook Hotel Trust  vs.  Pebblebrook Hotel Trust

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.

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. Despite weak performance in the last few months, the Preferred Stock's fundamental drivers 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 Pebblebrook Hotel

The main advantage of trading using opposite Pebblebrook Hotel and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel 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 Pebblebrook Hotel Trust 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.