Correlation Between Public Storage and First Industrial

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

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

Diversification Opportunities for Public Storage and First Industrial

0.16

Correlation Coefficient

Public Storage  First Industrial

Average diversification

The 3 months correlation between Public and First is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty 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 First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of Public Storage i.e., Public Storage and First Industrial go up and down completely randomly.

Pair Corralation between Public Storage and First Industrial

Assuming the 90 days trading horizon Public Storage is expected to generate 0.46 times more return on investment than First Industrial. However, Public Storage is 2.19 times less risky than First Industrial. It trades about 0.01 of its potential returns per unit of risk. First Industrial Realty is currently generating about -0.08 per unit of risk. If you would invest  2,464  in Public Storage on September 2, 2024 and sell it today you would earn a total of  7.00  from holding Public Storage or generate 0.28% return on investment over 90 days.

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

Public Storage  vs.  First Industrial Realty

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 fairly strong basic indicators, Public Storage is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

First Industrial Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First Industrial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Public Storage and First Industrial

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

The idea behind Public Storage and First Industrial Realty 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.