Correlation Between Pebblebrook Hotel and Playmates Toys
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Playmates Toys 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 Playmates Toys 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 Playmates Toys Limited, you can compare the effects of market volatilities on Pebblebrook Hotel and Playmates Toys 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 Playmates Toys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Playmates Toys.
Diversification Opportunities for Pebblebrook Hotel and Playmates Toys
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pebblebrook and Playmates is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Playmates Toys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playmates Toys 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 Playmates Toys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playmates Toys has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Playmates Toys go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Playmates Toys
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the Playmates Toys. But the stock apears to be less risky and, when comparing its historical volatility, Pebblebrook Hotel Trust is 6.11 times less risky than Playmates Toys. The stock trades about -0.1 of its potential returns per unit of risk. The Playmates Toys Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6.60 in Playmates Toys Limited on November 7, 2024 and sell it today you would lose (0.10) from holding Playmates Toys Limited or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. Playmates Toys Limited
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Playmates Toys |
Pebblebrook Hotel and Playmates Toys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Playmates Toys
The main advantage of trading using opposite Pebblebrook Hotel and Playmates Toys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Playmates Toys 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 Playmates Toys will offset losses from the drop in Playmates Toys' long position.| Pebblebrook Hotel vs. PennyMac Mortgage Investment | Pebblebrook Hotel vs. NH HOTEL GROUP | Pebblebrook Hotel vs. Regal Hotels International | Pebblebrook Hotel vs. SLR Investment Corp |
| Playmates Toys vs. ALEFARM BREWING DK 05 | Playmates Toys vs. ONWARD MEDICAL BV | Playmates Toys vs. TITAN MACHINERY | Playmates Toys vs. Hitachi Construction Machinery |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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