Correlation Between Westinghouse Air and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air 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 Westinghouse Air and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Westinghouse Air 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 Westinghouse Air with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Pebblebrook Hotel.
Diversification Opportunities for Westinghouse Air and Pebblebrook Hotel
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and Pebblebrook is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake 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 Westinghouse Air 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 Westinghouse Air Brake 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 Westinghouse Air i.e., Westinghouse Air and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between Westinghouse Air and Pebblebrook Hotel
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.59 times more return on investment than Pebblebrook Hotel. However, Westinghouse Air Brake is 1.71 times less risky than Pebblebrook Hotel. It trades about 0.29 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 14,864 in Westinghouse Air Brake on September 12, 2024 and sell it today you would earn a total of 4,311 from holding Westinghouse Air Brake or generate 29.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Pebblebrook Hotel Trust
Performance |
| Timeline |
| Westinghouse Air Brake |
| Pebblebrook Hotel Trust |
Westinghouse Air and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Pebblebrook Hotel
The main advantage of trading using opposite Westinghouse Air and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air 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.| Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB | Westinghouse Air vs. Norsk Hydro ASA |
| Pebblebrook Hotel vs. Amkor Technology | Pebblebrook Hotel vs. ATOSS SOFTWARE | Pebblebrook Hotel vs. UPDATE SOFTWARE | Pebblebrook Hotel vs. Check Point Software |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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