Correlation Between Sterling Construction and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Pebblebrook Hotel.
Diversification Opportunities for Sterling Construction and Pebblebrook Hotel
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sterling and Pebblebrook is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction 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 Sterling Construction 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 Sterling Construction 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 Sterling Construction i.e., Sterling Construction and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Sterling Construction and Pebblebrook Hotel
Assuming the 90 days horizon Sterling Construction is expected to generate 1.46 times more return on investment than Pebblebrook Hotel. However, Sterling Construction is 1.46 times more volatile than Pebblebrook Hotel Trust. It trades about 0.14 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.01 per unit of risk. If you would invest 3,900 in Sterling Construction on August 31, 2024 and sell it today you would earn a total of 14,475 from holding Sterling Construction or generate 371.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Sterling Construction |
| Pebblebrook Hotel Trust |
Sterling Construction and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Pebblebrook Hotel
The main advantage of trading using opposite Sterling Construction and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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.| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. NMI Holdings | Sterling Construction vs. Origin Agritech |
| Pebblebrook Hotel vs. Live Nation Entertainment | Pebblebrook Hotel vs. Hitachi Construction Machinery | Pebblebrook Hotel vs. PLAYSTUDIOS A DL 0001 | Pebblebrook Hotel vs. Sterling Construction |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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