Correlation Between INTERSHOP Communications and Public Storage

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

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

Diversification Opportunities for INTERSHOP Communications and Public Storage

-0.23

Correlation Coefficient

INTERSHOP Communications  Public Storage

Very good diversification

The 3 months correlation between INTERSHOP and Public is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and INTERSHOP Communications 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 INTERSHOP Communications Aktiengesellschaft 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 INTERSHOP Communications i.e., INTERSHOP Communications and Public Storage go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Public Storage

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the Public Storage. In addition to that, INTERSHOP Communications is 1.82 times more volatile than Public Storage. It trades about -0.01 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  26,193  in Public Storage on September 4, 2024 and sell it today you would earn a total of  6,887  from holding Public Storage or generate 26.29% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Public Storage

INTERSHOP Communications

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, INTERSHOP Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Public Storage

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Public Storage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Public Storage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with INTERSHOP Communications and Public Storage

The main advantage of trading using opposite INTERSHOP Communications and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERSHOP Communications 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 INTERSHOP Communications Aktiengesellschaft 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.