Correlation Between Public Storage and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Public Storage and Westinghouse Air 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 Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Westinghouse Air Brake, you can compare the effects of market volatilities on Public Storage and Westinghouse Air 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Westinghouse Air.
Diversification Opportunities for Public Storage and Westinghouse Air
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Public and Westinghouse is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Public Storage i.e., Public Storage and Westinghouse Air go up and down completely randomly.
Pair Corralation between Public Storage and Westinghouse Air
Assuming the 90 days trading horizon Public Storage is expected to under-perform the Westinghouse Air. But the stock apears to be less risky and, when comparing its historical volatility, Public Storage is 1.06 times less risky than Westinghouse Air. The stock trades about -0.02 of its potential returns per unit of risk. The Westinghouse Air Brake is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 58,823 in Westinghouse Air Brake on October 23, 2024 and sell it today you would earn a total of 2,560 from holding Westinghouse Air Brake or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. Westinghouse Air Brake
Performance |
| Timeline |
| Public Storage |
| Westinghouse Air Brake |
Public Storage and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Westinghouse Air
The main advantage of trading using opposite Public Storage and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.| Public Storage vs. Prologis | Public Storage vs. Extra Space Storage | Public Storage vs. BTG Pactual Logstica | Public Storage vs. Align Technology |
| Westinghouse Air vs. METISA Metalrgica Timboense | Westinghouse Air vs. Public Storage | Westinghouse Air vs. L3Harris Technologies, | Westinghouse Air vs. Patria Investments Limited |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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