Correlation Between PUBLIC STORAGE and Tokyo Electron

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

By analyzing existing cross correlation between PUBLIC STORAGE PRFO and Tokyo Electron Limited, you can compare the effects of market volatilities on PUBLIC STORAGE and Tokyo Electron 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 Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUBLIC STORAGE and Tokyo Electron.

Diversification Opportunities for PUBLIC STORAGE and Tokyo Electron

0.05

Correlation Coefficient

PUBLIC STORAGE  Tokyo Electron

Significant diversification

The 3 months correlation between PUBLIC and Tokyo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC STORAGE PRFO and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 PRFO are associated (or correlated) with Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of PUBLIC STORAGE i.e., PUBLIC STORAGE and Tokyo Electron go up and down completely randomly.

Pair Corralation between PUBLIC STORAGE and Tokyo Electron

Assuming the 90 days trading horizon PUBLIC STORAGE PRFO is expected to under-perform the Tokyo Electron. But the stock apears to be less risky and, when comparing its historical volatility, PUBLIC STORAGE PRFO is 4.16 times less risky than Tokyo Electron. The stock trades about -0.13 of its potential returns per unit of risk. The Tokyo Electron Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  13,445  in Tokyo Electron Limited on September 16, 2024 and sell it today you would earn a total of  1,420  from holding Tokyo Electron Limited or generate 10.56% return on investment over 90 days.

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

PUBLIC STORAGE PRFO  vs.  Tokyo Electron Limited

PUBLIC STORAGE PRFO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PUBLIC STORAGE PRFO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PUBLIC STORAGE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tokyo Electron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokyo Electron Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokyo Electron is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PUBLIC STORAGE and Tokyo Electron

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

The idea behind PUBLIC STORAGE PRFO and Tokyo Electron Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.