Correlation Between Public Storage and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Public Storage and Fevertree Drinks 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 Public Storage and Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Fevertree Drinks Plc, you can compare the effects of market volatilities on Public Storage and Fevertree Drinks 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 Public Storage with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Fevertree Drinks.
Diversification Opportunities for Public Storage and Fevertree Drinks
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Public and Fevertree is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and Public Storage 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 Public Storage are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Public Storage i.e., Public Storage and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Public Storage and Fevertree Drinks
Assuming the 90 days trading horizon Public Storage is expected to generate 0.81 times more return on investment than Fevertree Drinks. However, Public Storage is 1.24 times less risky than Fevertree Drinks. It trades about 0.03 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.03 per unit of risk. If you would invest 25,041 in Public Storage on September 23, 2024 and sell it today you would earn a total of 5,110 from holding Public Storage or generate 20.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.0% |
| Values | Daily Returns |
Public Storage vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Public Storage |
| Fevertree Drinks Plc |
Public Storage and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Fevertree Drinks
The main advantage of trading using opposite Public Storage and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Public Storage vs. Premier Foods PLC | Public Storage vs. Eco Animal Health | Public Storage vs. Grieg Seafood | Public Storage vs. Naturhouse Health SA |
| Fevertree Drinks vs. Roebuck Food Group | Fevertree Drinks vs. Austevoll Seafood ASA | Fevertree Drinks vs. Induction Healthcare Group | Fevertree Drinks vs. Hilton Food Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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