Correlation Between PUBLIC STORAGE and ARISTOCRAT LEISURE

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Can any of the company-specific risk be diversified away by investing in both PUBLIC STORAGE and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE, you can compare the effects of market volatilities on PUBLIC STORAGE and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUBLIC STORAGE and ARISTOCRAT LEISURE.

Diversification Opportunities for PUBLIC STORAGE and ARISTOCRAT LEISURE

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between PUBLIC and ARISTOCRAT is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC STORAGE PRFO and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of PUBLIC STORAGE i.e., PUBLIC STORAGE and ARISTOCRAT LEISURE go up and down completely randomly.

Pair Corralation between PUBLIC STORAGE and ARISTOCRAT LEISURE

Assuming the 90 days trading horizon PUBLIC STORAGE is expected to generate 12.37 times less return on investment than ARISTOCRAT LEISURE. But when comparing it to its historical volatility, PUBLIC STORAGE PRFO is 1.16 times less risky than ARISTOCRAT LEISURE. It trades about 0.01 of its potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,235  in ARISTOCRAT LEISURE on August 31, 2024 and sell it today you would earn a total of  1,925  from holding ARISTOCRAT LEISURE or generate 86.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.74%
ValuesDaily Returns

PUBLIC STORAGE PRFO  vs.  ARISTOCRAT LEISURE

 Performance 
       Timeline  
PUBLIC STORAGE PRFO 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PUBLIC STORAGE PRFO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PUBLIC STORAGE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
ARISTOCRAT LEISURE 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ARISTOCRAT LEISURE are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ARISTOCRAT LEISURE unveiled solid returns over the last few months and may actually be approaching a breakup point.

PUBLIC STORAGE and ARISTOCRAT LEISURE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PUBLIC STORAGE and ARISTOCRAT LEISURE

The main advantage of trading using opposite PUBLIC STORAGE and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PUBLIC STORAGE position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.
The idea behind PUBLIC STORAGE PRFO and ARISTOCRAT LEISURE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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