Correlation Between Public Storage and CubeSmart
Can any of the company-specific risk be diversified away by investing in both Public Storage and CubeSmart 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 CubeSmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and CubeSmart, you can compare the effects of market volatilities on Public Storage and CubeSmart 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 CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and CubeSmart.
Diversification Opportunities for Public Storage and CubeSmart
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Public and CubeSmart is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart 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 CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Public Storage i.e., Public Storage and CubeSmart go up and down completely randomly.
Pair Corralation between Public Storage and CubeSmart
Considering the 90-day investment horizon Public Storage is expected to under-perform the CubeSmart. But the stock apears to be less risky and, when comparing its historical volatility, Public Storage is 1.25 times less risky than CubeSmart. The stock trades about -0.03 of its potential returns per unit of risk. The CubeSmart is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,160 in CubeSmart on November 2, 2024 and sell it today you would earn a total of 37.00 from holding CubeSmart or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. CubeSmart
Performance |
| Timeline |
| Public Storage |
| CubeSmart |
Public Storage and CubeSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and CubeSmart
The main advantage of trading using opposite Public Storage and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, CubeSmart 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 CubeSmart will offset losses from the drop in CubeSmart's long position.| Public Storage vs. CubeSmart | Public Storage vs. National Storage Affiliates | Public Storage vs. Prologis | Public Storage vs. STAG Industrial |
| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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