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
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Public and Lexington is 0.72. 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
If you would invest 2,237 in Public Storage on November 8, 2024 and sell it today you would earn a total of 176.00 from holding Public Storage or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Public Storage vs. Lexington Realty Trust
Performance |
| Timeline |
| Public Storage |
| Lexington Realty Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
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.The idea behind Public Storage and Lexington Realty Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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