Correlation Between Pebblebrook Hotel and Sun Life
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Sun Life 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 Sun Life 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 Sun Life Financial, you can compare the effects of market volatilities on Pebblebrook Hotel and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Sun Life.
Diversification Opportunities for Pebblebrook Hotel and Sun Life
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pebblebrook and Sun is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Sun Life go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Sun Life
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 2.05 times more return on investment than Sun Life. However, Pebblebrook Hotel is 2.05 times more volatile than Sun Life Financial. It trades about 0.11 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.16 per unit of risk. If you would invest 1,130 in Pebblebrook Hotel Trust on September 22, 2024 and sell it today you would earn a total of 140.00 from holding Pebblebrook Hotel Trust or generate 12.39% 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. Sun Life Financial
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Sun Life Financial |
Pebblebrook Hotel and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Sun Life
The main advantage of trading using opposite Pebblebrook Hotel and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| Pebblebrook Hotel vs. Apple Inc | Pebblebrook Hotel vs. Apple Inc | Pebblebrook Hotel vs. Apple Inc | Pebblebrook Hotel vs. Apple Inc |
| Sun Life vs. Berkshire Hathaway | Sun Life vs. Berkshire Hathaway | Sun Life vs. Zurich Insurance Group | Sun Life vs. American International Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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