Correlation Between Power REIT and Public Storage
Can any of the company-specific risk be diversified away by investing in both Power REIT and Public Storage 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 Power REIT and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Public Storage, you can compare the effects of market volatilities on Power REIT and Public Storage 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 Power REIT with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Public Storage.
Diversification Opportunities for Power REIT and Public Storage
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Public is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and Power REIT 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 Power REIT are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Power REIT i.e., Power REIT and Public Storage go up and down completely randomly.
Pair Corralation between Power REIT and Public Storage
Allowing for the 90-day total investment horizon Power REIT is expected to generate 10.01 times more return on investment than Public Storage. However, Power REIT is 10.01 times more volatile than Public Storage. It trades about 0.04 of its potential returns per unit of risk. Public Storage is currently generating about 0.05 per unit of risk. If you would invest 125.00 in Power REIT on August 31, 2024 and sell it today you would lose (11.00) from holding Power REIT or give up 8.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Public Storage
Performance |
| Timeline |
| Power REIT |
| Public Storage |
Power REIT and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Public Storage
The main advantage of trading using opposite Power REIT and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage's long position.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Public Storage vs. CubeSmart | Public Storage vs. National Storage Affiliates | Public Storage vs. Prologis | Public Storage vs. STAG Industrial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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