Correlation Between Pebblebrook Hotel and Legacy Education
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Legacy Education 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 Legacy Education 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 Legacy Education, you can compare the effects of market volatilities on Pebblebrook Hotel and Legacy Education 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 Legacy Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Legacy Education.
Diversification Opportunities for Pebblebrook Hotel and Legacy Education
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pebblebrook and Legacy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Legacy Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education 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 Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Legacy Education go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Legacy Education
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the Legacy Education. But the preferred stock apears to be less risky and, when comparing its historical volatility, Pebblebrook Hotel Trust is 6.47 times less risky than Legacy Education. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Legacy Education is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 570.00 in Legacy Education on September 13, 2024 and sell it today you would earn a total of 230.00 from holding Legacy Education or generate 40.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pebblebrook Hotel Trust vs. Legacy Education
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Legacy Education |
Pebblebrook Hotel and Legacy Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Legacy Education
The main advantage of trading using opposite Pebblebrook Hotel and Legacy Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Legacy Education 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 Legacy Education will offset losses from the drop in Legacy Education's long position.| Pebblebrook Hotel vs. CECO Environmental Corp | Pebblebrook Hotel vs. Eldorado Gold Corp | Pebblebrook Hotel vs. KLA Tencor | Pebblebrook Hotel vs. Micron Technology |
| Legacy Education vs. European Wax Center | Legacy Education vs. Lion One Metals | Legacy Education vs. Aerofoam Metals | Legacy Education vs. Mannatech Incorporated |
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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