Correlation Between JAPAN TOBACCO and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO 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 JAPAN TOBACCO and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN TOBACCO UNSPADR12 and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on JAPAN TOBACCO 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 JAPAN TOBACCO with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Pebblebrook Hotel.
Diversification Opportunities for JAPAN TOBACCO and Pebblebrook Hotel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JAPAN and Pebblebrook is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO i.e., JAPAN TOBACCO and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Pebblebrook Hotel
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.82 times more return on investment than Pebblebrook Hotel. However, JAPAN TOBACCO UNSPADR12 is 1.22 times less risky than Pebblebrook Hotel. It trades about 0.07 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.02 per unit of risk. If you would invest 899.00 in JAPAN TOBACCO UNSPADR12 on September 12, 2024 and sell it today you would earn a total of 381.00 from holding JAPAN TOBACCO UNSPADR12 or generate 42.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Pebblebrook Hotel Trust |
JAPAN TOBACCO and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Pebblebrook Hotel
The main advantage of trading using opposite JAPAN TOBACCO and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO 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.| JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. Japan Tobacco |
| Pebblebrook Hotel vs. Perdoceo Education | Pebblebrook Hotel vs. Scandinavian Tobacco Group | Pebblebrook Hotel vs. Cleanaway Waste Management | Pebblebrook Hotel vs. JAPAN TOBACCO UNSPADR12 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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