Correlation Between Contact Energy and Public Storage
Can any of the company-specific risk be diversified away by investing in both Contact Energy 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 Contact Energy and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contact Energy Limited and Public Storage, you can compare the effects of market volatilities on Contact Energy 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 Contact Energy with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contact Energy and Public Storage.
Diversification Opportunities for Contact Energy and Public Storage
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Contact and Public is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Contact Energy Limited and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and Contact Energy 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 Contact Energy Limited 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 Contact Energy i.e., Contact Energy and Public Storage go up and down completely randomly.
Pair Corralation between Contact Energy and Public Storage
Assuming the 90 days horizon Contact Energy Limited is expected to generate 0.89 times more return on investment than Public Storage. However, Contact Energy Limited is 1.12 times less risky than Public Storage. It trades about 0.1 of its potential returns per unit of risk. Public Storage is currently generating about -0.1 per unit of risk. If you would invest 426.00 in Contact Energy Limited on September 25, 2024 and sell it today you would earn a total of 38.00 from holding Contact Energy Limited or generate 8.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Contact Energy Limited vs. Public Storage
Performance |
Timeline |
Contact Energy |
Public Storage |
Contact Energy and Public Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Contact Energy and Public Storage
The main advantage of trading using opposite Contact Energy and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contact Energy 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.Contact Energy vs. Public Storage | Contact Energy vs. Automatic Data Processing | Contact Energy vs. INFORMATION SVC GRP | Contact Energy vs. Host Hotels Resorts |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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