Correlation Between Pebblebrook Hotel and ARROW ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and ARROW ELECTRONICS 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 ARROW ELECTRONICS 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 ARROW ELECTRONICS, you can compare the effects of market volatilities on Pebblebrook Hotel and ARROW ELECTRONICS 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 ARROW ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and ARROW ELECTRONICS.
Diversification Opportunities for Pebblebrook Hotel and ARROW ELECTRONICS
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pebblebrook and ARROW is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and ARROW ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARROW ELECTRONICS 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 ARROW ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARROW ELECTRONICS has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and ARROW ELECTRONICS go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and ARROW ELECTRONICS
Assuming the 90 days trading horizon Pebblebrook Hotel is expected to generate 55.87 times less return on investment than ARROW ELECTRONICS. But when comparing it to its historical volatility, Pebblebrook Hotel Trust is 10.46 times less risky than ARROW ELECTRONICS. It trades about 0.01 of its potential returns per unit of risk. ARROW ELECTRONICS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,100 in ARROW ELECTRONICS on August 31, 2024 and sell it today you would lose (800.00) from holding ARROW ELECTRONICS or give up 6.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. ARROW ELECTRONICS
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| ARROW ELECTRONICS |
Pebblebrook Hotel and ARROW ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and ARROW ELECTRONICS
The main advantage of trading using opposite Pebblebrook Hotel and ARROW ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, ARROW ELECTRONICS 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 ARROW ELECTRONICS will offset losses from the drop in ARROW ELECTRONICS's long position.| Pebblebrook Hotel vs. Live Nation Entertainment | Pebblebrook Hotel vs. Hitachi Construction Machinery | Pebblebrook Hotel vs. PLAYSTUDIOS A DL 0001 | Pebblebrook Hotel vs. Sterling Construction |
| ARROW ELECTRONICS vs. SIVERS SEMICONDUCTORS AB | ARROW ELECTRONICS vs. Darden Restaurants | ARROW ELECTRONICS vs. Reliance Steel Aluminum | ARROW ELECTRONICS vs. Q2M Managementberatung 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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