Correlation Between Pebblebrook Hotel and British American
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on Pebblebrook Hotel and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and British American.
Diversification Opportunities for Pebblebrook Hotel and British American
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pebblebrook and British is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and British American go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and British American
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the British American. In addition to that, Pebblebrook Hotel is 1.68 times more volatile than British American Tobacco. It trades about 0.0 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.02 per unit of volatility. If you would invest 3,213 in British American Tobacco on September 3, 2024 and sell it today you would earn a total of 327.00 from holding British American Tobacco or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. British American Tobacco
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| British American Tobacco |
Pebblebrook Hotel and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and British American
The main advantage of trading using opposite Pebblebrook Hotel and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Pebblebrook Hotel vs. X FAB Silicon Foundries | Pebblebrook Hotel vs. RETAIL FOOD GROUP | Pebblebrook Hotel vs. MARKET VECTR RETAIL | Pebblebrook Hotel vs. National Retail Properties |
| British American vs. AEGEAN AIRLINES | British American vs. United Airlines Holdings | British American vs. International Consolidated Airlines | British American vs. Nok Airlines PCL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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