Correlation Between InterContinental and Pebblebrook Hotel
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Pebblebrook Hotel.
Diversification Opportunities for InterContinental and Pebblebrook Hotel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and Pebblebrook is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Pebblebrook Hotel go up and down completely randomly.
Pair Corralation between InterContinental and Pebblebrook Hotel
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.63 times more return on investment than Pebblebrook Hotel. However, InterContinental Hotels Group is 1.58 times less risky than Pebblebrook Hotel. It trades about 0.21 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.05 per unit of risk. If you would invest 9,850 in InterContinental Hotels Group on September 25, 2024 and sell it today you would earn a total of 2,150 from holding InterContinental Hotels Group or generate 21.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
InterContinental Hotels Group vs. Pebblebrook Hotel Trust
Performance |
Timeline |
InterContinental Hotels |
Pebblebrook Hotel Trust |
InterContinental and Pebblebrook Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and Pebblebrook Hotel
The main advantage of trading using opposite InterContinental and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.InterContinental vs. ULTRA CLEAN HLDGS | InterContinental vs. Vishay Intertechnology | InterContinental vs. Computer And Technologies | InterContinental vs. Wayside Technology Group |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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