Correlation Between STAG Industrial and Public Storage
Can any of the company-specific risk be diversified away by investing in both STAG Industrial 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 STAG Industrial and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STAG Industrial and Public Storage, you can compare the effects of market volatilities on STAG Industrial 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 STAG Industrial with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAG Industrial and Public Storage.
Diversification Opportunities for STAG Industrial and Public Storage
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STAG and Public is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and STAG Industrial 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 STAG Industrial 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 STAG Industrial i.e., STAG Industrial and Public Storage go up and down completely randomly.
Pair Corralation between STAG Industrial and Public Storage
Given the investment horizon of 90 days STAG Industrial is expected to under-perform the Public Storage. But the stock apears to be less risky and, when comparing its historical volatility, STAG Industrial is 1.47 times less risky than Public Storage. The stock trades about -0.01 of its potential returns per unit of risk. The Public Storage is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 33,661 in Public Storage on August 28, 2024 and sell it today you would earn a total of 1,122 from holding Public Storage or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STAG Industrial vs. Public Storage
Performance |
| Timeline |
| STAG Industrial |
| Public Storage |
STAG Industrial and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STAG Industrial and Public Storage
The main advantage of trading using opposite STAG Industrial and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial 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.| STAG Industrial vs. Public Storage | STAG Industrial vs. Extra Space Storage | STAG Industrial vs. Rexford Industrial Realty | STAG Industrial vs. Innovative Industrial Properties |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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