Correlation Between Pebblebrook Hotel and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Tenaris SA 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 Tenaris SA 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 Tenaris SA, you can compare the effects of market volatilities on Pebblebrook Hotel and Tenaris SA 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 Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Tenaris SA.
Diversification Opportunities for Pebblebrook Hotel and Tenaris SA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pebblebrook and Tenaris is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Tenaris SA go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Tenaris SA
Assuming the 90 days trading horizon Pebblebrook Hotel is expected to generate 2.2 times less return on investment than Tenaris SA. In addition to that, Pebblebrook Hotel is 1.7 times more volatile than Tenaris SA. It trades about 0.07 of its total potential returns per unit of risk. Tenaris SA is currently generating about 0.25 per unit of volatility. If you would invest 3,560 in Tenaris SA on October 25, 2024 and sell it today you would earn a total of 140.00 from holding Tenaris SA or generate 3.93% 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. Tenaris SA
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Tenaris SA |
Pebblebrook Hotel and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Tenaris SA
The main advantage of trading using opposite Pebblebrook Hotel and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA's long position.| Pebblebrook Hotel vs. Cars Inc | Pebblebrook Hotel vs. United Natural Foods | Pebblebrook Hotel vs. Motorcar Parts of | Pebblebrook Hotel vs. Cal Maine Foods |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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