Correlation Between Public Storage and Sumitomo Chemical
Can any of the company-specific risk be diversified away by investing in both Public Storage and Sumitomo Chemical 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 Sumitomo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Sumitomo Chemical, you can compare the effects of market volatilities on Public Storage and Sumitomo Chemical 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 Sumitomo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Sumitomo Chemical.
Diversification Opportunities for Public Storage and Sumitomo Chemical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Public and Sumitomo is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Sumitomo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Chemical 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 Sumitomo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Chemical has no effect on the direction of Public Storage i.e., Public Storage and Sumitomo Chemical go up and down completely randomly.
Pair Corralation between Public Storage and Sumitomo Chemical
Assuming the 90 days horizon Public Storage is expected to generate 0.62 times more return on investment than Sumitomo Chemical. However, Public Storage is 1.6 times less risky than Sumitomo Chemical. It trades about 0.04 of its potential returns per unit of risk. Sumitomo Chemical is currently generating about -0.02 per unit of risk. If you would invest 26,158 in Public Storage on August 30, 2024 and sell it today you would earn a total of 6,762 from holding Public Storage or generate 25.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. Sumitomo Chemical
Performance |
| Timeline |
| Public Storage |
| Sumitomo Chemical |
Public Storage and Sumitomo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Sumitomo Chemical
The main advantage of trading using opposite Public Storage and Sumitomo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, Sumitomo Chemical 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 Sumitomo Chemical will offset losses from the drop in Sumitomo Chemical's long position.| Public Storage vs. EastGroup Properties | Public Storage vs. Superior Plus Corp | Public Storage vs. SIVERS SEMICONDUCTORS AB | Public Storage vs. Talanx AG |
| Sumitomo Chemical vs. Air Liquide SA | Sumitomo Chemical vs. Air Products and | Sumitomo Chemical vs. Shin Etsu Chemical Co | Sumitomo Chemical vs. BASF SE |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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