Correlation Between INVITATION HOMES and Public Storage
Can any of the company-specific risk be diversified away by investing in both INVITATION HOMES 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 INVITATION HOMES and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INVITATION HOMES DL and Public Storage, you can compare the effects of market volatilities on INVITATION HOMES 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 INVITATION HOMES with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVITATION HOMES and Public Storage.
Diversification Opportunities for INVITATION HOMES and Public Storage
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INVITATION and Public is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding INVITATION HOMES DL and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and INVITATION HOMES 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 INVITATION HOMES DL 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 INVITATION HOMES i.e., INVITATION HOMES and Public Storage go up and down completely randomly.
Pair Corralation between INVITATION HOMES and Public Storage
Assuming the 90 days horizon INVITATION HOMES DL is expected to generate 0.86 times more return on investment than Public Storage. However, INVITATION HOMES DL is 1.16 times less risky than Public Storage. It trades about 0.03 of its potential returns per unit of risk. Public Storage is currently generating about -0.05 per unit of risk. If you would invest 3,140 in INVITATION HOMES DL on September 13, 2024 and sell it today you would earn a total of 20.00 from holding INVITATION HOMES DL or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INVITATION HOMES DL vs. Public Storage
Performance |
| Timeline |
| INVITATION HOMES |
| Public Storage |
INVITATION HOMES and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INVITATION HOMES and Public Storage
The main advantage of trading using opposite INVITATION HOMES and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVITATION HOMES 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.| INVITATION HOMES vs. American Homes 4 | INVITATION HOMES vs. Superior Plus Corp | INVITATION HOMES vs. SIVERS SEMICONDUCTORS AB | INVITATION HOMES vs. NorAm Drilling AS |
| Public Storage vs. Prologis | Public Storage vs. Yara International ASA | Public Storage vs. Ascendas Real Estate | Public Storage vs. STAG Industrial |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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