Correlation Between American Homes and Public Storage
Can any of the company-specific risk be diversified away by investing in both American Homes 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 American Homes and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and Public Storage, you can compare the effects of market volatilities on American Homes 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 American Homes with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Public Storage.
Diversification Opportunities for American Homes and Public Storage
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Public is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and American Homes 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 American Homes 4 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 American Homes i.e., American Homes and Public Storage go up and down completely randomly.
Pair Corralation between American Homes and Public Storage
Assuming the 90 days trading horizon American Homes 4 is expected to generate 1.1 times more return on investment than Public Storage. However, American Homes is 1.1 times more volatile than Public Storage. It trades about -0.01 of its potential returns per unit of risk. Public Storage is currently generating about -0.45 per unit of risk. If you would invest 3,515 in American Homes 4 on September 24, 2024 and sell it today you would lose (15.00) from holding American Homes 4 or give up 0.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
American Homes 4 vs. Public Storage
Performance |
Timeline |
American Homes 4 |
Public Storage |
American Homes and Public Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Homes and Public Storage
The main advantage of trading using opposite American Homes and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes 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.American Homes vs. Fevertree Drinks PLC | American Homes vs. MAGNUM MINING EXP | American Homes vs. United Breweries Co | American Homes vs. THAI BEVERAGE |
Public Storage vs. Prologis | Public Storage vs. SEGRO Plc | Public Storage vs. Yara International ASA | Public Storage vs. EastGroup Properties |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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