Correlation Between Public Storage and Lexington Realty
Can any of the company-specific risk be diversified away by investing in both Public Storage and Lexington Realty 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 Lexington Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Lexington Realty Trust, you can compare the effects of market volatilities on Public Storage and Lexington Realty 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 Lexington Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Lexington Realty.
Diversification Opportunities for Public Storage and Lexington Realty
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Public and Lexington is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Lexington Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexington Realty Trust 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 Lexington Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexington Realty Trust has no effect on the direction of Public Storage i.e., Public Storage and Lexington Realty go up and down completely randomly.
Pair Corralation between Public Storage and Lexington Realty
Assuming the 90 days trading horizon Public Storage is expected to generate 12.23 times less return on investment than Lexington Realty. But when comparing it to its historical volatility, Public Storage is 1.99 times less risky than Lexington Realty. It trades about 0.02 of its potential returns per unit of risk. Lexington Realty Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,406 in Lexington Realty Trust on September 1, 2024 and sell it today you would earn a total of 596.00 from holding Lexington Realty Trust or generate 13.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. Lexington Realty Trust
Performance |
| Timeline |
| Public Storage |
| Lexington Realty Trust |
Public Storage and Lexington Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Lexington Realty
The main advantage of trading using opposite Public Storage and Lexington Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, Lexington Realty 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 Lexington Realty will offset losses from the drop in Lexington Realty's long position.| Public Storage vs. Public Storage | Public Storage vs. Public Storage | Public Storage vs. Public Storage | Public Storage vs. Public Storage |
| Lexington Realty vs. Prologis | Lexington Realty vs. Public Storage | Lexington Realty vs. LXP Industrial Trust | Lexington Realty vs. Plymouth Industrial REIT |
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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