Correlation Between Public Storage and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Public Storage and Canadian Utilities 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 Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Canadian Utilities Limited, you can compare the effects of market volatilities on Public Storage and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Canadian Utilities.
Diversification Opportunities for Public Storage and Canadian Utilities
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Public and Canadian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Public Storage i.e., Public Storage and Canadian Utilities go up and down completely randomly.
Pair Corralation between Public Storage and Canadian Utilities
Assuming the 90 days horizon Public Storage is expected to generate 1.28 times more return on investment than Canadian Utilities. However, Public Storage is 1.28 times more volatile than Canadian Utilities Limited. It trades about 0.04 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.02 per unit of risk. If you would invest 26,512 in Public Storage on September 3, 2024 and sell it today you would earn a total of 6,808 from holding Public Storage or generate 25.68% 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. Canadian Utilities Limited
Performance |
| Timeline |
| Public Storage |
| Canadian Utilities |
Public Storage and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Canadian Utilities
The main advantage of trading using opposite Public Storage and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Public Storage vs. SBA Communications Corp | Public Storage vs. INTERSHOP Communications Aktiengesellschaft | Public Storage vs. Cass Information Systems | Public Storage vs. Citic Telecom International |
| Canadian Utilities vs. MAVEN WIRELESS SWEDEN | Canadian Utilities vs. Citic Telecom International | Canadian Utilities vs. Tower One Wireless | Canadian Utilities vs. Chunghwa Telecom Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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