Correlation Between Public Storage and American Eagle
Can any of the company-specific risk be diversified away by investing in both Public Storage and American Eagle 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 American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and American Eagle Outfitters, you can compare the effects of market volatilities on Public Storage and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and American Eagle.
Diversification Opportunities for Public Storage and American Eagle
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Public and American is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Public Storage i.e., Public Storage and American Eagle go up and down completely randomly.
Pair Corralation between Public Storage and American Eagle
Assuming the 90 days horizon Public Storage is expected to generate 0.85 times more return on investment than American Eagle. However, Public Storage is 1.17 times less risky than American Eagle. It trades about 0.22 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.06 per unit of risk. If you would invest 30,780 in Public Storage on September 1, 2024 and sell it today you would earn a total of 2,540 from holding Public Storage or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. American Eagle Outfitters
Performance |
| Timeline |
| Public Storage |
| American Eagle Outfitters |
Public Storage and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and American Eagle
The main advantage of trading using opposite Public Storage and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Public Storage vs. INDOFOOD AGRI RES | Public Storage vs. China BlueChemical | Public Storage vs. Lifeway Foods | Public Storage vs. TYSON FOODS A |
| American Eagle vs. LPKF Laser Electronics | American Eagle vs. AOI Electronics Co | American Eagle vs. CITY OFFICE REIT | American Eagle vs. ARROW ELECTRONICS |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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