Correlation Between Pebblebrook Hotel and Salesforce
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Salesforce 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 Salesforce 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 Salesforce, you can compare the effects of market volatilities on Pebblebrook Hotel and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Salesforce.
Diversification Opportunities for Pebblebrook Hotel and Salesforce
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pebblebrook and Salesforce is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Salesforce go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Salesforce
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 1.02 times more return on investment than Salesforce. However, Pebblebrook Hotel is 1.02 times more volatile than Salesforce. It trades about 0.28 of its potential returns per unit of risk. Salesforce is currently generating about 0.27 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 200.00 from holding Pebblebrook Hotel Trust or generate 18.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. Salesforce
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Salesforce |
Pebblebrook Hotel and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Salesforce
The main advantage of trading using opposite Pebblebrook Hotel and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.The idea behind Pebblebrook Hotel Trust and Salesforce 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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