Correlation Between PUBLIC STORAGE and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both PUBLIC STORAGE and Gamma Communications 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 Gamma Communications 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 Gamma Communications plc, you can compare the effects of market volatilities on PUBLIC STORAGE and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUBLIC STORAGE and Gamma Communications.
Diversification Opportunities for PUBLIC STORAGE and Gamma Communications
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PUBLIC and Gamma is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC STORAGE PRFO and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of PUBLIC STORAGE i.e., PUBLIC STORAGE and Gamma Communications go up and down completely randomly.
Pair Corralation between PUBLIC STORAGE and Gamma Communications
Assuming the 90 days trading horizon PUBLIC STORAGE is expected to generate 5.07 times less return on investment than Gamma Communications. But when comparing it to its historical volatility, PUBLIC STORAGE PRFO is 2.56 times less risky than Gamma Communications. It trades about 0.05 of its potential returns per unit of risk. Gamma Communications plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,168 in Gamma Communications plc on August 31, 2024 and sell it today you would earn a total of 702.00 from holding Gamma Communications plc or generate 60.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PUBLIC STORAGE PRFO vs. Gamma Communications plc
Performance |
| Timeline |
| PUBLIC STORAGE PRFO |
| Gamma Communications plc |
PUBLIC STORAGE and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PUBLIC STORAGE and Gamma Communications
The main advantage of trading using opposite PUBLIC STORAGE and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PUBLIC STORAGE position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| PUBLIC STORAGE vs. Lyxor 1 | PUBLIC STORAGE vs. Xtrackers ShortDAX | PUBLIC STORAGE vs. Xtrackers LevDAX | PUBLIC STORAGE vs. Superior Plus Corp |
| Gamma Communications vs. Performance Food Group | Gamma Communications vs. Waste Management | Gamma Communications vs. CeoTronics AG | Gamma Communications vs. Cleanaway Waste Management |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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