Correlation Between Public Storage and KB HOME
Can any of the company-specific risk be diversified away by investing in both Public Storage and KB HOME 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 KB HOME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and KB HOME, you can compare the effects of market volatilities on Public Storage and KB HOME 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 KB HOME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and KB HOME.
Diversification Opportunities for Public Storage and KB HOME
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Public and KBH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME 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 KB HOME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB HOME has no effect on the direction of Public Storage i.e., Public Storage and KB HOME go up and down completely randomly.
Pair Corralation between Public Storage and KB HOME
Assuming the 90 days horizon Public Storage is expected to generate 0.65 times more return on investment than KB HOME. However, Public Storage is 1.55 times less risky than KB HOME. It trades about -0.16 of its potential returns per unit of risk. KB HOME is currently generating about -0.14 per unit of risk. If you would invest 32,362 in Public Storage on September 24, 2024 and sell it today you would lose (4,692) from holding Public Storage or give up 14.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Public Storage vs. KB HOME
Performance |
Timeline |
Public Storage |
KB HOME |
Public Storage and KB HOME Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Public Storage and KB HOME
The main advantage of trading using opposite Public Storage and KB HOME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage position performs unexpectedly, KB HOME 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 KB HOME will offset losses from the drop in KB HOME's long position.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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