Correlation Between Pebblebrook Hotel and WPP Dusseldorf
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and WPP Dusseldorf 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 Pebblebrook Hotel and WPP Dusseldorf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pebblebrook Hotel Trust and WPP Dusseldorf, you can compare the effects of market volatilities on Pebblebrook Hotel and WPP Dusseldorf 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 Pebblebrook Hotel with a short position of WPP Dusseldorf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and WPP Dusseldorf.
Diversification Opportunities for Pebblebrook Hotel and WPP Dusseldorf
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pebblebrook and WPP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and WPP Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPP Dusseldorf and Pebblebrook Hotel 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 Pebblebrook Hotel Trust are associated (or correlated) with WPP Dusseldorf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPP Dusseldorf has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and WPP Dusseldorf go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and WPP Dusseldorf
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the WPP Dusseldorf. In addition to that, Pebblebrook Hotel is 1.46 times more volatile than WPP Dusseldorf. It trades about 0.0 of its total potential returns per unit of risk. WPP Dusseldorf is currently generating about 0.03 per unit of volatility. If you would invest 882.00 in WPP Dusseldorf on September 2, 2024 and sell it today you would earn a total of 138.00 from holding WPP Dusseldorf or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. WPP Dusseldorf
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| WPP Dusseldorf |
Pebblebrook Hotel and WPP Dusseldorf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and WPP Dusseldorf
The main advantage of trading using opposite Pebblebrook Hotel and WPP Dusseldorf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, WPP Dusseldorf 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 WPP Dusseldorf will offset losses from the drop in WPP Dusseldorf's long position.| Pebblebrook Hotel vs. Apple Inc | Pebblebrook Hotel vs. Apple Inc | Pebblebrook Hotel vs. Apple Inc | Pebblebrook Hotel vs. Apple Inc |
| WPP Dusseldorf vs. ETFS Coffee ETC | WPP Dusseldorf vs. Pebblebrook Hotel Trust | WPP Dusseldorf vs. Summit Hotel Properties | WPP Dusseldorf vs. MHP Hotel AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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