Correlation Between Public Storage and Rexford Industrial

Can any of the company-specific risk be diversified away by investing in both Public Storage and Rexford 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 Rexford 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 Rexford Industrial Realty, you can compare the effects of market volatilities on Public Storage and Rexford 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 Rexford Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Rexford Industrial.

Diversification Opportunities for Public Storage and Rexford Industrial

-0.14

Correlation Coefficient

Public Storage  Rexford Industrial

Good diversification

The 3 months correlation between Public and Rexford is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Rexford Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexford 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 Rexford Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexford Industrial Realty has no effect on the direction of Public Storage i.e., Public Storage and Rexford Industrial go up and down completely randomly.

Pair Corralation between Public Storage and Rexford Industrial

Assuming the 90 days trading horizon Public Storage is expected to generate 0.9 times more return on investment than Rexford Industrial. However, Public Storage is 1.11 times less risky than Rexford Industrial. It trades about 0.03 of its potential returns per unit of risk. Rexford Industrial Realty is currently generating about 0.01 per unit of risk. If you would invest  2,288  in Public Storage on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Public Storage or generate 0.96% return on investment over 90 days.

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

Public Storage  vs.  Rexford Industrial Realty

Public Storage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Public Storage are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Public Storage is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Rexford Industrial Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rexford Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Rexford Industrial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Public Storage and Rexford Industrial

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

The idea behind Public Storage and Rexford 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.