Correlation Between TYSON FOODS and Pebblebrook Hotel

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

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

Diversification Opportunities for TYSON FOODS and Pebblebrook Hotel

0.51

Correlation Coefficient

TYSON FOODS  Pebblebrook Hotel

Very weak diversification

The 3 months correlation between TYSON and Pebblebrook is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding TYSON FOODS A 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 TYSON FOODS 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 TYSON FOODS A 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 TYSON FOODS i.e., TYSON FOODS and Pebblebrook Hotel go up and down completely randomly.

Pair Corralation between TYSON FOODS and Pebblebrook Hotel

Assuming the 90 days trading horizon TYSON FOODS is expected to generate 3.57 times less return on investment than Pebblebrook Hotel. But when comparing it to its historical volatility, TYSON FOODS A is 1.45 times less risky than Pebblebrook Hotel. It trades about 0.01 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,238  in Pebblebrook Hotel Trust on October 20, 2024 and sell it today you would earn a total of  72.00  from holding Pebblebrook Hotel Trust or generate 5.82% return on investment over 90 days.

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

TYSON FOODS A   vs.  Pebblebrook Hotel Trust

TYSON FOODS A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TYSON FOODS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TYSON FOODS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pebblebrook Hotel Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pebblebrook Hotel Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Pebblebrook Hotel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TYSON FOODS and Pebblebrook Hotel

The main advantage of trading using opposite TYSON FOODS and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TYSON FOODS 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 TYSON FOODS A 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.