Correlation Between CECO Environmental and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both CECO Environmental 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 CECO Environmental and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO Environmental Corp and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on CECO Environmental 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 CECO Environmental with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Pebblebrook Hotel.
Diversification Opportunities for CECO Environmental and Pebblebrook Hotel
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CECO and Pebblebrook is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp 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 CECO Environmental 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 CECO Environmental Corp 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 CECO Environmental i.e., CECO Environmental and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between CECO Environmental and Pebblebrook Hotel
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.69 times more return on investment than Pebblebrook Hotel. However, CECO Environmental is 2.69 times more volatile than Pebblebrook Hotel Trust. It trades about 0.07 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.02 per unit of risk. If you would invest 2,104 in CECO Environmental Corp on September 14, 2024 and sell it today you would earn a total of 1,117 from holding CECO Environmental Corp or generate 53.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.17% |
| Values | Daily Returns |
CECO Environmental Corp vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| CECO Environmental Corp |
| Pebblebrook Hotel Trust |
CECO Environmental and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Pebblebrook Hotel
The main advantage of trading using opposite CECO Environmental and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental 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.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Pebblebrook Hotel vs. Celsius Holdings | Pebblebrook Hotel vs. Ispire Technology Common | Pebblebrook Hotel vs. Vita Coco | Pebblebrook Hotel vs. Anheuser Busch Inbev |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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