Correlation Between Chatham Lodging and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Chatham Lodging 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 Chatham Lodging and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chatham Lodging Trust and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Chatham Lodging 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 Chatham Lodging with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chatham Lodging and Pebblebrook Hotel.
Diversification Opportunities for Chatham Lodging and Pebblebrook Hotel
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chatham and Pebblebrook is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chatham Lodging Trust 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 Chatham Lodging 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 Chatham Lodging Trust 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 Chatham Lodging i.e., Chatham Lodging and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Chatham Lodging and Pebblebrook Hotel
Given the investment horizon of 90 days Chatham Lodging Trust is expected to under-perform the Pebblebrook Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Chatham Lodging Trust is 1.15 times less risky than Pebblebrook Hotel. The stock trades about -0.03 of its potential returns per unit of risk. The Pebblebrook Hotel Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,601 in Pebblebrook Hotel Trust on November 2, 2024 and sell it today you would lose (290.00) from holding Pebblebrook Hotel Trust or give up 18.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Chatham Lodging Trust vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Chatham Lodging Trust |
| Pebblebrook Hotel Trust |
Chatham Lodging and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chatham Lodging and Pebblebrook Hotel
The main advantage of trading using opposite Chatham Lodging and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chatham Lodging 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.| Chatham Lodging vs. Summit Hotel Properties | Chatham Lodging vs. RLJ Lodging Trust | Chatham Lodging vs. Pebblebrook Hotel Trust | Chatham Lodging vs. Whitestone REIT |
| Pebblebrook Hotel vs. RLJ Lodging Trust | Pebblebrook Hotel vs. Sunstone Hotel Investors | Pebblebrook Hotel vs. Diamondrock Hospitality | Pebblebrook Hotel vs. Summit Hotel Properties |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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