Correlation Between Pebblebrook Hotel and InterContinental
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on Pebblebrook Hotel and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and InterContinental.
Diversification Opportunities for Pebblebrook Hotel and InterContinental
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pebblebrook and InterContinental is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and InterContinental go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and InterContinental
Assuming the 90 days trading horizon Pebblebrook Hotel is expected to generate 3.52 times less return on investment than InterContinental. In addition to that, Pebblebrook Hotel is 1.45 times more volatile than InterContinental Hotels Group. It trades about 0.05 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.23 per unit of volatility. If you would invest 10,800 in InterContinental Hotels Group on November 6, 2024 and sell it today you would earn a total of 2,100 from holding InterContinental Hotels Group or generate 19.44% 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. InterContinental Hotels Group
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| InterContinental Hotels |
Pebblebrook Hotel and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and InterContinental
The main advantage of trading using opposite Pebblebrook Hotel and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| Pebblebrook Hotel vs. PennyMac Mortgage Investment | Pebblebrook Hotel vs. NH HOTEL GROUP | Pebblebrook Hotel vs. Regal Hotels International | Pebblebrook Hotel vs. SLR Investment Corp |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
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| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |