Correlation Between Public Storage and REDSUN PROPERTIES

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

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

Diversification Opportunities for Public Storage and REDSUN PROPERTIES

0.06

Correlation Coefficient

Public Storage  REDSUN PROPERTIES

Significant diversification

The 3 months correlation between Public and REDSUN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES 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 REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of Public Storage i.e., Public Storage and REDSUN PROPERTIES go up and down completely randomly.

Pair Corralation between Public Storage and REDSUN PROPERTIES

Assuming the 90 days horizon Public Storage is expected to under-perform the REDSUN PROPERTIES. But the stock apears to be less risky and, when comparing its historical volatility, Public Storage is 32.01 times less risky than REDSUN PROPERTIES. The stock trades about -0.1 of its potential returns per unit of risk. The REDSUN PROPERTIES GROUP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.10  in REDSUN PROPERTIES GROUP on September 25, 2024 and sell it today you would earn a total of  0.20  from holding REDSUN PROPERTIES GROUP or generate 200.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Public Storage  vs.  REDSUN PROPERTIES GROUP

Public Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

REDSUN PROPERTIES

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REDSUN PROPERTIES GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REDSUN PROPERTIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Public Storage and REDSUN PROPERTIES

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

The idea behind Public Storage and REDSUN PROPERTIES GROUP 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.