Correlation Between Public Storage and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Public Storage and CarsalesCom 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 CarsalesCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and CarsalesCom, you can compare the effects of market volatilities on Public Storage and CarsalesCom 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 CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and CarsalesCom.
Diversification Opportunities for Public Storage and CarsalesCom
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Public and CarsalesCom is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Public Storage i.e., Public Storage and CarsalesCom go up and down completely randomly.
Pair Corralation between Public Storage and CarsalesCom
Assuming the 90 days horizon Public Storage is expected to generate 2.26 times less return on investment than CarsalesCom. But when comparing it to its historical volatility, Public Storage is 1.19 times less risky than CarsalesCom. It trades about 0.06 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,328 in CarsalesCom on August 31, 2024 and sell it today you would earn a total of 1,232 from holding CarsalesCom or generate 92.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Public Storage vs. CarsalesCom
Performance |
| Timeline |
| Public Storage |
| CarsalesCom |
Public Storage and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and CarsalesCom
The main advantage of trading using opposite Public Storage and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| Public Storage vs. Games Workshop Group | Public Storage vs. DALATA HOTEL | Public Storage vs. ANGLER GAMING PLC | Public Storage vs. Penn National Gaming |
| CarsalesCom vs. AEGEAN AIRLINES | CarsalesCom vs. CompuGroup Medical SE | CarsalesCom vs. IMAGIN MEDICAL INC | CarsalesCom vs. Nok Airlines PCL |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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