Correlation Between Public Storage and FirstService Corp

Can any of the company-specific risk be diversified away by investing in both Public Storage and FirstService Corp 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 FirstService Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Public Storage and FirstService Corp, you can compare the effects of market volatilities on Public Storage and FirstService Corp 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 FirstService Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and FirstService Corp.

Diversification Opportunities for Public Storage and FirstService Corp

0.15

Correlation Coefficient

Public Storage  FirstService Corp

Average diversification

The 3 months correlation between Public and FirstService is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp 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 are associated (or correlated) with FirstService Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstService Corp has no effect on the direction of Public Storage i.e., Public Storage and FirstService Corp go up and down completely randomly.

Pair Corralation between Public Storage and FirstService Corp

Assuming the 90 days trading horizon Public Storage is expected to under-perform the FirstService Corp. But the preferred stock apears to be less risky and, when comparing its historical volatility, Public Storage is 2.45 times less risky than FirstService Corp. The preferred stock trades about -0.1 of its potential returns per unit of risk. The FirstService Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  17,573  in FirstService Corp on February 13, 2025 and sell it today you would lose (58.00) from holding FirstService Corp or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Public Storage  vs.  FirstService Corp

Public Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Public Storage is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

FirstService Corp

Risk-Adjusted Performance

Weak

Over the last 90 days FirstService Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FirstService Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Public Storage and FirstService Corp

The main advantage of trading using opposite Public Storage and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, FirstService Corp 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 FirstService Corp will offset losses from the drop in FirstService Corp's long position.

The idea behind Public Storage and FirstService Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.