Correlation Between Hersha Hospitality and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Hersha Hospitality 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 Hersha Hospitality and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hersha Hospitality Trust and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Hersha Hospitality 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 Hersha Hospitality with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hersha Hospitality and Pebblebrook Hotel.
Diversification Opportunities for Hersha Hospitality and Pebblebrook Hotel
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hersha and Pebblebrook is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hersha Hospitality 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 Hersha Hospitality 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 Hersha Hospitality 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 Hersha Hospitality i.e., Hersha Hospitality and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Hersha Hospitality and Pebblebrook Hotel
Allowing for the 90-day total investment horizon Hersha Hospitality Trust is expected to under-perform the Pebblebrook Hotel. In addition to that, Hersha Hospitality is 1.01 times more volatile than Pebblebrook Hotel Trust. It trades about -0.16 of its total potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about -0.01 per unit of volatility. 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 Against |
| Strength | Insignificant |
| Accuracy | 22.67% |
| Values | Daily Returns |
Hersha Hospitality Trust vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Hersha Hospitality Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pebblebrook Hotel Trust |
Hersha Hospitality and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hersha Hospitality and Pebblebrook Hotel
The main advantage of trading using opposite Hersha Hospitality and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hersha Hospitality 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.| Hersha Hospitality vs. RLJ Lodging Trust | Hersha Hospitality vs. Sunstone Hotel Investors | Hersha Hospitality vs. Pebblebrook Hotel Trust | Hersha Hospitality vs. Summit Hotel Properties |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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