Correlation Between TRAVEL LEISURE and PUBLIC STORAGE

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and PUBLIC STORAGE PRFO, you can compare the effects of market volatilities on TRAVEL LEISURE 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 TRAVEL LEISURE with a short position of PUBLIC STORAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL LEISURE and PUBLIC STORAGE.

Diversification Opportunities for TRAVEL LEISURE and PUBLIC STORAGE

-0.58

Correlation Coefficient

TRAVEL LEISURE  PUBLIC STORAGE

Excellent diversification

The 3 months correlation between TRAVEL and PUBLIC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and PUBLIC STORAGE PRFO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUBLIC STORAGE PRFO and TRAVEL LEISURE 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 TRAVEL LEISURE DL 01 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 PRFO has no effect on the direction of TRAVEL LEISURE i.e., TRAVEL LEISURE and PUBLIC STORAGE go up and down completely randomly.

Pair Corralation between TRAVEL LEISURE and PUBLIC STORAGE

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 1.51 times more return on investment than PUBLIC STORAGE. However, TRAVEL LEISURE is 1.51 times more volatile than PUBLIC STORAGE PRFO. It trades about 0.22 of its potential returns per unit of risk. PUBLIC STORAGE PRFO is currently generating about -0.09 per unit of risk. If you would invest  3,941  in TRAVEL LEISURE DL 01 on September 23, 2024 and sell it today you would earn a total of  959.00  from holding TRAVEL LEISURE DL 01 or generate 24.33% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  PUBLIC STORAGE PRFO

TRAVEL LEISURE DL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TRAVEL LEISURE reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with TRAVEL LEISURE and PUBLIC STORAGE

The main advantage of trading using opposite TRAVEL LEISURE and PUBLIC STORAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL LEISURE 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 TRAVEL LEISURE DL 01 and PUBLIC STORAGE PRFO 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.