Correlation Between Progressive and Public Storage

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

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

Diversification Opportunities for Progressive and Public Storage

0.45

Correlation Coefficient

Progressive  Public Storage

Very weak diversification

The 3 months correlation between Progressive and Public is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and Progressive 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 The Progressive 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 Progressive i.e., Progressive and Public Storage go up and down completely randomly.

Pair Corralation between Progressive and Public Storage

Assuming the 90 days horizon The Progressive is expected to generate 1.0 times more return on investment than Public Storage. However, The Progressive is 1.0 times less risky than Public Storage. It trades about 0.13 of its potential returns per unit of risk. Public Storage is currently generating about 0.1 per unit of risk. If you would invest  22,780  in The Progressive on September 2, 2024 and sell it today you would earn a total of  2,845  from holding The Progressive or generate 12.49% return on investment over 90 days.

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

The Progressive  vs.  Public Storage

Progressive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Progressive are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Progressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Public Storage

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Public Storage are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Public Storage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Progressive and Public Storage

The main advantage of trading using opposite Progressive and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive 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.

The idea behind The Progressive and Public Storage 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..