Correlation Between Pebblebrook Hotel and Braemar Hotels
Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Braemar Hotels 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 Braemar Hotels 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 Braemar Hotels Resorts, you can compare the effects of market volatilities on Pebblebrook Hotel and Braemar Hotels 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 Braemar Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Braemar Hotels.
Diversification Opportunities for Pebblebrook Hotel and Braemar Hotels
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pebblebrook and Braemar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Braemar Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braemar Hotels Resorts 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 Braemar Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braemar Hotels Resorts has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Braemar Hotels go up and down completely randomly.
Pair Corralation between Pebblebrook Hotel and Braemar Hotels
Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to under-perform the Braemar Hotels. But the preferred stock apears to be less risky and, when comparing its historical volatility, Pebblebrook Hotel Trust is 1.81 times less risky than Braemar Hotels. The preferred stock trades about -0.33 of its potential returns per unit of risk. The Braemar Hotels Resorts is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,090 in Braemar Hotels Resorts on August 31, 2024 and sell it today you would earn a total of 30.00 from holding Braemar Hotels Resorts or generate 1.44% 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. Braemar Hotels Resorts
Performance |
| Timeline |
| Pebblebrook Hotel Trust |
| Braemar Hotels Resorts |
Pebblebrook Hotel and Braemar Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pebblebrook Hotel and Braemar Hotels
The main advantage of trading using opposite Pebblebrook Hotel and Braemar Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Braemar Hotels 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 Braemar Hotels will offset losses from the drop in Braemar Hotels' long position.| Pebblebrook Hotel vs. Ashford Hospitality Trust | Pebblebrook Hotel vs. Ashford Hospitality Trust | Pebblebrook Hotel vs. Ashford Hospitality Trust | Pebblebrook Hotel vs. Braemar Hotels Resorts |
| Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Ashford Hospitality Trust | Braemar Hotels vs. Braemar Hotels Resorts | Braemar Hotels vs. Ashford Hospitality Trust |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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