Correlation Between PUBLIC STORAGE and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both PUBLIC STORAGE and INVITATION HOMES 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 INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PUBLIC STORAGE PRFO and INVITATION HOMES DL, you can compare the effects of market volatilities on PUBLIC STORAGE and INVITATION HOMES 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 INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUBLIC STORAGE and INVITATION HOMES.
Diversification Opportunities for PUBLIC STORAGE and INVITATION HOMES
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between PUBLIC and INVITATION is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC STORAGE PRFO and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 PRFO are associated (or correlated) with INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of PUBLIC STORAGE i.e., PUBLIC STORAGE and INVITATION HOMES go up and down completely randomly.
Pair Corralation between PUBLIC STORAGE and INVITATION HOMES
Assuming the 90 days trading horizon PUBLIC STORAGE PRFO is expected to under-perform the INVITATION HOMES. But the stock apears to be less risky and, when comparing its historical volatility, PUBLIC STORAGE PRFO is 1.17 times less risky than INVITATION HOMES. The stock trades about -0.14 of its potential returns per unit of risk. The INVITATION HOMES DL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,140 in INVITATION HOMES DL on September 13, 2024 and sell it today you would earn a total of 20.00 from holding INVITATION HOMES DL or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PUBLIC STORAGE PRFO vs. INVITATION HOMES DL
Performance |
| Timeline |
| PUBLIC STORAGE PRFO |
| INVITATION HOMES |
PUBLIC STORAGE and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PUBLIC STORAGE and INVITATION HOMES
The main advantage of trading using opposite PUBLIC STORAGE and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PUBLIC STORAGE position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| PUBLIC STORAGE vs. Xtrackers LevDAX | PUBLIC STORAGE vs. Xtrackers ShortDAX | PUBLIC STORAGE vs. Lyxor 1 | PUBLIC STORAGE vs. SIVERS SEMICONDUCTORS AB |
| INVITATION HOMES vs. American Homes 4 | INVITATION HOMES vs. Superior Plus Corp | INVITATION HOMES vs. SIVERS SEMICONDUCTORS AB | INVITATION HOMES vs. NorAm Drilling AS |
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 CEOs Directory module to screen CEOs from public companies around the world.
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