Correlation Between Public Storage and Plymouth Industrial

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

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

Diversification Opportunities for Public Storage and Plymouth Industrial

-0.05

Correlation Coefficient

Public Storage  Plymouth Industrial

Good diversification

The 3 months correlation between Public and Plymouth is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Plymouth Industrial REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plymouth Industrial REIT 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 Plymouth Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plymouth Industrial REIT has no effect on the direction of Public Storage i.e., Public Storage and Plymouth Industrial go up and down completely randomly.

Pair Corralation between Public Storage and Plymouth Industrial

Considering the 90-day investment horizon Public Storage is expected to generate 1.05 times more return on investment than Plymouth Industrial. However, Public Storage is 1.05 times more volatile than Plymouth Industrial REIT. It trades about 0.08 of its potential returns per unit of risk. Plymouth Industrial REIT is currently generating about -0.12 per unit of risk. If you would invest  31,171  in Public Storage on August 10, 2024 and sell it today you would earn a total of  2,142  from holding Public Storage or generate 6.87% return on investment over 90 days.

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

Public Storage  vs.  Plymouth Industrial REIT

Public Storage

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Public Storage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Public Storage may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Plymouth Industrial REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plymouth Industrial REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Public Storage and Plymouth Industrial

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

The idea behind Public Storage and Plymouth Industrial REIT 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.