Correlation Between Pebblebrook Hotel and Wharf Real

Can any of the company-specific risk be diversified away by investing in both Pebblebrook Hotel and Wharf Real 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 Wharf Real 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 Wharf Real Estate, you can compare the effects of market volatilities on Pebblebrook Hotel and Wharf Real 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 Wharf Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Wharf Real.

Diversification Opportunities for Pebblebrook Hotel and Wharf Real

0.33

Correlation Coefficient

Pebblebrook Hotel  Wharf Real

Weak diversification

The 3 months correlation between Pebblebrook and Wharf is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Wharf Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Real Estate 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 Wharf Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Real Estate has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Wharf Real go up and down completely randomly.

Pair Corralation between Pebblebrook Hotel and Wharf Real

Assuming the 90 days trading horizon Pebblebrook Hotel is expected to generate 1.78 times less return on investment than Wharf Real. In addition to that, Pebblebrook Hotel is 1.18 times more volatile than Wharf Real Estate. It trades about 0.1 of its total potential returns per unit of risk. Wharf Real Estate is currently generating about 0.2 per unit of volatility. If you would invest  198.00  in Wharf Real Estate on April 20, 2025 and sell it today you would earn a total of  66.00  from holding Wharf Real Estate or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pebblebrook Hotel Trust  vs.  Wharf Real Estate

Pebblebrook Hotel Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pebblebrook Hotel Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Pebblebrook Hotel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Wharf Real Estate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wharf Real Estate are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Wharf Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pebblebrook Hotel and Wharf Real

The main advantage of trading using opposite Pebblebrook Hotel and Wharf Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pebblebrook Hotel position performs unexpectedly, Wharf Real 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 Wharf Real will offset losses from the drop in Wharf Real's long position.

The idea behind Pebblebrook Hotel Trust and Wharf Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.