Correlation Between Pebblebrook Hotel and Constellation Software
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Constellation Software 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 Constellation Software 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 Constellation Software, you can compare the effects of market volatilities on Pebblebrook Hotel and Constellation Software 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 Constellation Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Constellation Software.
Diversification Opportunities for Pebblebrook Hotel and Constellation Software
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pebblebrook and Constellation is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software 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 Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Constellation Software go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Constellation Software
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 1.21 times more return on investment than Constellation Software. However, Pebblebrook Hotel is 1.21 times more volatile than Constellation Software. It trades about -0.17 of its potential returns per unit of risk. Constellation Software is currently generating about -0.26 per unit of risk. If you would invest 1,359 in Pebblebrook Hotel Trust on October 16, 2024 and sell it today you would lose (89.00) from holding Pebblebrook Hotel Trust or give up 6.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. Constellation Software
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Constellation Software |
Pebblebrook Hotel and Constellation Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Constellation Software
The main advantage of trading using opposite Pebblebrook Hotel and Constellation Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Constellation Software 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 Constellation Software will offset losses from the drop in Constellation Software's long position.| Pebblebrook Hotel vs. Elmos Semiconductor SE | Pebblebrook Hotel vs. BE Semiconductor Industries | Pebblebrook Hotel vs. KINGBOARD CHEMICAL | Pebblebrook Hotel vs. Siamgas And Petrochemicals |
| Constellation Software vs. GWILLI FOOD | Constellation Software vs. EBRO FOODS | Constellation Software vs. Pebblebrook Hotel Trust | Constellation Software vs. Lifeway Foods |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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