Correlation Between Charter Communications and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Pebblebrook Hotel.
Diversification Opportunities for Charter Communications and Pebblebrook Hotel
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Charter and Pebblebrook is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Charter Communications and Pebblebrook Hotel
Assuming the 90 days trading horizon Charter Communications is expected to generate 2.11 times less return on investment than Pebblebrook Hotel. But when comparing it to its historical volatility, Charter Communications is 1.1 times less risky than Pebblebrook Hotel. It trades about 0.18 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,090 in Pebblebrook Hotel Trust on September 5, 2024 and sell it today you would earn a total of 270.00 from holding Pebblebrook Hotel Trust or generate 24.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Charter Communications |
| Pebblebrook Hotel Trust |
Charter Communications and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Pebblebrook Hotel
The main advantage of trading using opposite Charter Communications and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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