Correlation Between New Residential and Public Storage
Can any of the company-specific risk be diversified away by investing in both New Residential and Public Storage 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 New Residential and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Public Storage, you can compare the effects of market volatilities on New Residential and Public Storage 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 New Residential with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Public Storage.
Diversification Opportunities for New Residential and Public Storage
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Public is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and New Residential 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 New Residential Investment are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of New Residential i.e., New Residential and Public Storage go up and down completely randomly.
Pair Corralation between New Residential and Public Storage
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.8 times more return on investment than Public Storage. However, New Residential Investment is 1.25 times less risky than Public Storage. It trades about 0.13 of its potential returns per unit of risk. Public Storage is currently generating about -0.19 per unit of risk. If you would invest 1,030 in New Residential Investment on October 14, 2024 and sell it today you would earn a total of 31.00 from holding New Residential Investment or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Public Storage
Performance |
| Timeline |
| New Residential Inve |
| Public Storage |
New Residential and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Public Storage
The main advantage of trading using opposite New Residential and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage's long position.| New Residential vs. Addus HomeCare | New Residential vs. Gaztransport Technigaz SA | New Residential vs. CITY OFFICE REIT | New Residential vs. Yuexiu Transport Infrastructure |
| Public Storage vs. Fair Isaac Corp | Public Storage vs. Alaska Air Group | Public Storage vs. Ryanair Holdings plc | Public Storage vs. Southwest Airlines Co |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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