Correlation Between Pebblebrook Hotel and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and MACOM Technology 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 MACOM Technology 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 MACOM Technology Solutions, you can compare the effects of market volatilities on Pebblebrook Hotel and MACOM Technology 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 MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and MACOM Technology.
Diversification Opportunities for Pebblebrook Hotel and MACOM Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pebblebrook and MACOM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol 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 MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and MACOM Technology go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and MACOM Technology
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 0.6 times more return on investment than MACOM Technology. However, Pebblebrook Hotel Trust is 1.68 times less risky than MACOM Technology. It trades about -0.37 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about -0.23 per unit of risk. If you would invest 1,310 in Pebblebrook Hotel Trust on November 27, 2024 and sell it today you would lose (190.00) from holding Pebblebrook Hotel Trust or give up 14.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. MACOM Technology Solutions
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| MACOM Technology Sol |
Pebblebrook Hotel and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and MACOM Technology
The main advantage of trading using opposite Pebblebrook Hotel and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| Pebblebrook Hotel vs. Take Two Interactive Software | Pebblebrook Hotel vs. EITZEN CHEMICALS | Pebblebrook Hotel vs. Mitsui Chemicals | Pebblebrook Hotel vs. Coor Service Management |
| MACOM Technology vs. NVIDIA | MACOM Technology vs. NVIDIA | MACOM Technology vs. Taiwan Semiconductor Manufacturing | MACOM Technology vs. Broadcom |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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