Correlation Between HomeToGo and Public Storage

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

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

Diversification Opportunities for HomeToGo and Public Storage

-0.09

Correlation Coefficient

HomeToGo  Public Storage

Good diversification

The 3 months correlation between HomeToGo and Public is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and HomeToGo 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 HomeToGo SE 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 HomeToGo i.e., HomeToGo and Public Storage go up and down completely randomly.

Pair Corralation between HomeToGo and Public Storage

Assuming the 90 days trading horizon HomeToGo SE is expected to under-perform the Public Storage. In addition to that, HomeToGo is 2.19 times more volatile than Public Storage. It trades about -0.02 of its total potential returns per unit of risk. Public Storage is currently generating about 0.04 per unit of volatility. If you would invest  23,825  in Public Storage on September 24, 2024 and sell it today you would earn a total of  3,845  from holding Public Storage or generate 16.14% return on investment over 90 days.

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

HomeToGo SE  vs.  Public Storage

HomeToGo SE

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, HomeToGo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HomeToGo and Public Storage

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

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.