Correlation Between CleanTech Lithium and Public Storage
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium 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 CleanTech Lithium and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Public Storage, you can compare the effects of market volatilities on CleanTech Lithium 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 CleanTech Lithium with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Public Storage.
Diversification Opportunities for CleanTech Lithium and Public Storage
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CleanTech and Public is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and CleanTech Lithium 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 CleanTech Lithium plc 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 CleanTech Lithium i.e., CleanTech Lithium and Public Storage go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Public Storage
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Public Storage. In addition to that, CleanTech Lithium is 1.23 times more volatile than Public Storage. It trades about -0.33 of its total potential returns per unit of risk. Public Storage is currently generating about -0.34 per unit of volatility. If you would invest 32,553 in Public Storage on October 11, 2024 and sell it today you would lose (3,140) from holding Public Storage or give up 9.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Public Storage
Performance |
| Timeline |
| CleanTech Lithium plc |
| Public Storage |
CleanTech Lithium and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Public Storage
The main advantage of trading using opposite CleanTech Lithium and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium 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.| CleanTech Lithium vs. Smithson Investment Trust | CleanTech Lithium vs. Broadridge Financial Solutions | CleanTech Lithium vs. Software Circle plc | CleanTech Lithium vs. Mobius Investment Trust |
| Public Storage vs. EJF Investments | Public Storage vs. Primorus Investments plc | Public Storage vs. Delta Air Lines | Public Storage vs. Wizz Air Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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