Correlation Between Pebblebrook Hotel and REGAL ASIAN
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and REGAL ASIAN 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 REGAL ASIAN 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 REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on Pebblebrook Hotel and REGAL ASIAN 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 REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and REGAL ASIAN.
Diversification Opportunities for Pebblebrook Hotel and REGAL ASIAN
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pebblebrook and REGAL is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS 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 REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and REGAL ASIAN go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and REGAL ASIAN
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 2.01 times more return on investment than REGAL ASIAN. However, Pebblebrook Hotel is 2.01 times more volatile than REGAL ASIAN INVESTMENTS. It trades about 0.27 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.24 per unit of risk. If you would invest 1,090 in Pebblebrook Hotel Trust on September 1, 2024 and sell it today you would earn a total of 190.00 from holding Pebblebrook Hotel Trust or generate 17.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. REGAL ASIAN INVESTMENTS
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| REGAL ASIAN INVESTMENTS |
Pebblebrook Hotel and REGAL ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and REGAL ASIAN
The main advantage of trading using opposite Pebblebrook Hotel and REGAL ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, REGAL ASIAN 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 REGAL ASIAN will offset losses from the drop in REGAL ASIAN's long position.The idea behind Pebblebrook Hotel Trust and REGAL ASIAN INVESTMENTS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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