Correlation Between Pebblebrook Hotel and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on Pebblebrook Hotel and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Aristocrat Leisure.
Diversification Opportunities for Pebblebrook Hotel and Aristocrat Leisure
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pebblebrook and Aristocrat is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Aristocrat Leisure
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 1.2 times more return on investment than Aristocrat Leisure. However, Pebblebrook Hotel is 1.2 times more volatile than Aristocrat Leisure Limited. It trades about 0.06 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about -0.06 per unit of risk. If you would invest 1,309 in Pebblebrook Hotel Trust on October 28, 2024 and sell it today you would earn a total of 21.00 from holding Pebblebrook Hotel Trust or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Aristocrat Leisure |
Pebblebrook Hotel and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Aristocrat Leisure
The main advantage of trading using opposite Pebblebrook Hotel and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Pebblebrook Hotel vs. Kingdee International Software | Pebblebrook Hotel vs. New Residential Investment | Pebblebrook Hotel vs. MidCap Financial Investment | Pebblebrook Hotel vs. FANDIFI TECHNOLOGY P |
| Aristocrat Leisure vs. VELA TECHNOLPLC LS 0001 | Aristocrat Leisure vs. Perdoceo Education | Aristocrat Leisure vs. PKSHA TECHNOLOGY INC | Aristocrat Leisure vs. ASPEN TECHINC DL |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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