Correlation Between Aristocrat Leisure and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure 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 Aristocrat Leisure and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Aristocrat Leisure 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 Aristocrat Leisure with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Pebblebrook Hotel.
Diversification Opportunities for Aristocrat Leisure and Pebblebrook Hotel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aristocrat and Pebblebrook is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited 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 Aristocrat Leisure 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 Aristocrat Leisure Limited 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 Aristocrat Leisure i.e., Aristocrat Leisure and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Pebblebrook Hotel
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 1.06 times more return on investment than Pebblebrook Hotel. However, Aristocrat Leisure is 1.06 times more volatile than Pebblebrook Hotel Trust. It trades about 0.2 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about -0.04 per unit of risk. If you would invest 4,200 in Aristocrat Leisure Limited on November 6, 2024 and sell it today you would earn a total of 300.00 from holding Aristocrat Leisure Limited or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Aristocrat Leisure |
| Pebblebrook Hotel Trust |
Aristocrat Leisure and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Pebblebrook Hotel
The main advantage of trading using opposite Aristocrat Leisure and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure 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.| Aristocrat Leisure vs. BJs Wholesale Club | Aristocrat Leisure vs. Ross Stores | Aristocrat Leisure vs. Caseys General Stores | Aristocrat Leisure vs. H2O Retailing |
| Pebblebrook Hotel vs. PennyMac Mortgage Investment | Pebblebrook Hotel vs. NH HOTEL GROUP | Pebblebrook Hotel vs. Regal Hotels International | Pebblebrook Hotel vs. SLR Investment Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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