Correlation Between Boyd Gaming and Pebblebrook Hotel

Can any of the company-specific risk be diversified away by investing in both Boyd Gaming 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 Boyd Gaming and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boyd Gaming and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on Boyd Gaming 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 Boyd Gaming with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Pebblebrook Hotel.

Diversification Opportunities for Boyd Gaming and Pebblebrook Hotel

0.39

Correlation Coefficient

Boyd Gaming  Pebblebrook Hotel

Weak diversification

The 3 months correlation between Boyd and Pebblebrook is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming 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 Boyd Gaming 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 Boyd Gaming 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 Boyd Gaming i.e., Boyd Gaming and Pebblebrook Hotel go up and down completely randomly.

Pair Corralation between Boyd Gaming and Pebblebrook Hotel

Considering the 90-day investment horizon Boyd Gaming is expected to under-perform the Pebblebrook Hotel. In addition to that, Boyd Gaming is 1.62 times more volatile than Pebblebrook Hotel Trust. It trades about -0.23 of its total potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about -0.13 per unit of volatility. If you would invest  1,520  in Pebblebrook Hotel Trust on February 4, 2024 and sell it today you would lose (96.00) from holding Pebblebrook Hotel Trust or give up 6.32% of portfolio value over 90 days.

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

Boyd Gaming  vs.  Pebblebrook Hotel Trust

Boyd Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boyd Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pebblebrook Hotel Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pebblebrook Hotel Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Pebblebrook Hotel is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boyd Gaming and Pebblebrook Hotel

The main advantage of trading using opposite Boyd Gaming and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming 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.

The idea behind Boyd Gaming and Pebblebrook Hotel Trust 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..