Correlation Between Ready Capital and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Ready Capital and Pebblebrook Hotel 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 Ready Capital and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ready Capital Corp and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Ready Capital and Pebblebrook Hotel 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 Ready Capital with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ready Capital and Pebblebrook Hotel.
Diversification Opportunities for Ready Capital and Pebblebrook Hotel
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ready and Pebblebrook is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Pebblebrook Hotel Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pebblebrook Hotel Trust and Ready Capital 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 Ready Capital Corp are associated (or correlated) with Pebblebrook Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pebblebrook Hotel Trust has no effect on the direction of Ready Capital i.e., Ready Capital and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Ready Capital and Pebblebrook Hotel
Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 1.93 times more return on investment than Pebblebrook Hotel. However, Ready Capital is 1.93 times more volatile than Pebblebrook Hotel Trust. It trades about 0.2 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about -0.15 per unit of risk. If you would invest 691.00 in Ready Capital Corp on August 27, 2024 and sell it today you would earn a total of 48.00 from holding Ready Capital Corp or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ready Capital Corp vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Ready Capital Corp |
| Pebblebrook Hotel Trust |
Ready Capital and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ready Capital and Pebblebrook Hotel
The main advantage of trading using opposite Ready Capital and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ready Capital position performs unexpectedly, Pebblebrook Hotel 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 Pebblebrook Hotel will offset losses from the drop in Pebblebrook Hotel's long position.| Ready Capital vs. Blackstone Mortgage Trust | Ready Capital vs. Omega Healthcare Investors | Ready Capital vs. Medical Properties Trust |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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