Correlation Between First Industrial and Pebblebrook Hotel

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

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

Diversification Opportunities for First Industrial and Pebblebrook Hotel

-0.29

Correlation Coefficient

First Industrial  Pebblebrook Hotel

Very good diversification

The 3 months correlation between First and Pebblebrook is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty 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 First Industrial 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 First Industrial Realty 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 First Industrial i.e., First Industrial and Pebblebrook Hotel go up and down completely randomly.

Pair Corralation between First Industrial and Pebblebrook Hotel

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.59 times more return on investment than Pebblebrook Hotel. However, First Industrial Realty is 1.69 times less risky than Pebblebrook Hotel. It trades about -0.32 of its potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about -0.4 per unit of risk. If you would invest  5,538  in First Industrial Realty on January 7, 2025 and sell it today you would lose (770.00) from holding First Industrial Realty or give up 13.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

First Industrial Realty  vs.  Pebblebrook Hotel Trust

First Industrial Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First Industrial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pebblebrook Hotel Trust

Risk-Adjusted Performance

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 sluggish performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with First Industrial and Pebblebrook Hotel

The main advantage of trading using opposite First Industrial and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial 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 First Industrial Realty 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.