Correlation Between Service Properties and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Service Properties 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 Service Properties and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Service Properties Trust and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Service Properties 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 Service Properties with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service Properties and Pebblebrook Hotel.
Diversification Opportunities for Service Properties and Pebblebrook Hotel
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Service and Pebblebrook is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties 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 Service Properties 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 Service Properties 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 Service Properties i.e., Service Properties and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Service Properties and Pebblebrook Hotel
Assuming the 90 days horizon Service Properties is expected to generate 4.25 times less return on investment than Pebblebrook Hotel. In addition to that, Service Properties is 1.56 times more volatile than Pebblebrook Hotel Trust. It trades about 0.05 of its total potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.35 per unit of volatility. If you would invest 1,180 in Pebblebrook Hotel Trust on September 13, 2024 and sell it today you would earn a total of 210.00 from holding Pebblebrook Hotel Trust or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Service Properties Trust vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Service Properties Trust |
| Pebblebrook Hotel Trust |
Service Properties and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Service Properties and Pebblebrook Hotel
The main advantage of trading using opposite Service Properties and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Properties 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.| Service Properties vs. Westinghouse Air Brake | Service Properties vs. Fair Isaac Corp | Service Properties vs. Pentair plc | Service Properties vs. Direct Line Insurance |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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