Correlation Between Prologis and Life Storage

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

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

Diversification Opportunities for Prologis and Life Storage

0.0

Correlation Coefficient

Prologis  Life Storage

Pay attention - limited upside

The 3 months correlation between Prologis and Life is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prologis and Life Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Storage and Prologis 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 Prologis are associated (or correlated) with Life Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Storage has no effect on the direction of Prologis i.e., Prologis and Life Storage go up and down completely randomly.

Pair Corralation between Prologis and Life Storage

If you would invest  10,417  in Prologis on December 28, 2024 and sell it today you would earn a total of  658.00  from holding Prologis or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Prologis  vs.  Life Storage

Prologis

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prologis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Prologis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Life Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Life Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Life Storage is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Prologis and Life Storage

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

The idea behind Prologis and Life 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.