Correlation Between Public Storage and Rexford Industrial
Can any of the company-specific risk be diversified away by investing in both Public Storage and Rexford Industrial 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 Rexford Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Rexford Industrial Realty, you can compare the effects of market volatilities on Public Storage and Rexford Industrial 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 Rexford Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Rexford Industrial.
Diversification Opportunities for Public Storage and Rexford Industrial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Public and Rexford is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Rexford Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexford Industrial Realty 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 Rexford Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexford Industrial Realty has no effect on the direction of Public Storage i.e., Public Storage and Rexford Industrial go up and down completely randomly.
Pair Corralation between Public Storage and Rexford Industrial
Assuming the 90 days trading horizon Public Storage is expected to generate 22.0 times less return on investment than Rexford Industrial. But when comparing it to its historical volatility, Public Storage is 1.27 times less risky than Rexford Industrial. It trades about 0.01 of its potential returns per unit of risk. Rexford Industrial Realty is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,095 in Rexford Industrial Realty on September 1, 2024 and sell it today you would earn a total of 215.00 from holding Rexford Industrial Realty or generate 10.26% 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. Rexford Industrial Realty
Performance |
| Timeline |
| Public Storage |
| Rexford Industrial Realty |
Public Storage and Rexford Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Rexford Industrial
The main advantage of trading using opposite Public Storage and Rexford Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, Rexford Industrial 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 Rexford Industrial will offset losses from the drop in Rexford Industrial's long position.| Public Storage vs. Public Storage | Public Storage vs. Public Storage | Public Storage vs. Public Storage | Public Storage vs. Public Storage |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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