Correlation Between WPP Dusseldorf and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both WPP Dusseldorf 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 WPP Dusseldorf and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP Dusseldorf and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on WPP Dusseldorf 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 WPP Dusseldorf with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP Dusseldorf and Pebblebrook Hotel.
Diversification Opportunities for WPP Dusseldorf and Pebblebrook Hotel
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WPP and Pebblebrook is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding WPP Dusseldorf 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 WPP Dusseldorf 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 WPP Dusseldorf 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 WPP Dusseldorf i.e., WPP Dusseldorf and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between WPP Dusseldorf and Pebblebrook Hotel
Assuming the 90 days trading horizon WPP Dusseldorf is expected to generate 3.8 times less return on investment than Pebblebrook Hotel. But when comparing it to its historical volatility, WPP Dusseldorf is 2.13 times less risky than Pebblebrook Hotel. It trades about 0.16 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,080 in Pebblebrook Hotel Trust on September 2, 2024 and sell it today you would earn a total of 200.00 from holding Pebblebrook Hotel Trust or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP Dusseldorf vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| WPP Dusseldorf |
| Pebblebrook Hotel Trust |
WPP Dusseldorf and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP Dusseldorf and Pebblebrook Hotel
The main advantage of trading using opposite WPP Dusseldorf and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP Dusseldorf 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.| WPP Dusseldorf vs. ETFS Coffee ETC | WPP Dusseldorf vs. Pebblebrook Hotel Trust | WPP Dusseldorf vs. Summit Hotel Properties | WPP Dusseldorf vs. MHP Hotel AG |
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Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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