Correlation Between Cars and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Cars 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 Cars with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Pebblebrook Hotel.
Diversification Opportunities for Cars and Pebblebrook Hotel
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cars and Pebblebrook is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc 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 Cars 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 Cars Inc 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 Cars i.e., Cars and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Cars and Pebblebrook Hotel
Assuming the 90 days horizon Cars Inc is expected to generate 1.54 times more return on investment than Pebblebrook Hotel. However, Cars is 1.54 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 1,630 in Cars Inc on November 4, 2024 and sell it today you would earn a total of 170.00 from holding Cars Inc or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Cars Inc |
| Pebblebrook Hotel Trust |
Cars and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Pebblebrook Hotel
The main advantage of trading using opposite Cars and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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 Cars Inc 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.| Pebblebrook Hotel vs. Corporate Office Properties | Pebblebrook Hotel vs. VARIOUS EATERIES LS | Pebblebrook Hotel vs. East Africa Metals | Pebblebrook Hotel vs. GALENA MINING LTD |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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