Correlation Between Public Storage and Industrial Logistics
Can any of the company-specific risk be diversified away by investing in both Public Storage and Industrial Logistics 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 Industrial Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Industrial Logistics Properties, you can compare the effects of market volatilities on Public Storage and Industrial Logistics 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 Industrial Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Industrial Logistics.
Diversification Opportunities for Public Storage and Industrial Logistics
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Public and Industrial is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Industrial Logistics Propertie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Logistics 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 Industrial Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Logistics has no effect on the direction of Public Storage i.e., Public Storage and Industrial Logistics go up and down completely randomly.
Pair Corralation between Public Storage and Industrial Logistics
Assuming the 90 days trading horizon Public Storage is expected to generate 3.41 times less return on investment than Industrial Logistics. But when comparing it to its historical volatility, Public Storage is 5.98 times less risky than Industrial Logistics. It trades about 0.04 of its potential returns per unit of risk. Industrial Logistics Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 353.00 in Industrial Logistics Properties on August 28, 2024 and sell it today you would earn a total of 28.00 from holding Industrial Logistics Properties or generate 7.93% 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. Industrial Logistics Propertie
Performance |
| Timeline |
| Public Storage |
| Industrial Logistics |
Public Storage and Industrial Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Industrial Logistics
The main advantage of trading using opposite Public Storage and Industrial Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, Industrial Logistics 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 Industrial Logistics will offset losses from the drop in Industrial Logistics' long position.| Public Storage vs. Public Storage | Public Storage vs. Public Storage | Public Storage vs. Public Storage | Public Storage vs. Public Storage |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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