Correlation Between Public Storage and Fair Isaac

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

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

Diversification Opportunities for Public Storage and Fair Isaac

0.62

Correlation Coefficient

Public Storage  Fair Isaac

Poor diversification

The 3 months correlation between Public and Fair is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Fair Isaac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac has no effect on the direction of Public Storage i.e., Public Storage and Fair Isaac go up and down completely randomly.

Pair Corralation between Public Storage and Fair Isaac

Assuming the 90 days trading horizon Public Storage is expected to generate 0.75 times more return on investment than Fair Isaac. However, Public Storage is 1.34 times less risky than Fair Isaac. It trades about -0.02 of its potential returns per unit of risk. Fair Isaac is currently generating about -0.4 per unit of risk. If you would invest  36,372  in Public Storage on October 24, 2024 and sell it today you would lose (228.00) from holding Public Storage or give up 0.63% of portfolio value over 90 days.

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

Public Storage  vs.  Fair Isaac

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 somewhat strong basic indicators, Public Storage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fair Isaac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Fair Isaac is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Public Storage and Fair Isaac

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

The idea behind Public Storage and Fair Isaac 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..