Correlation Between PUBLIC STORAGE and Howden Joinery

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

By analyzing existing cross correlation between PUBLIC STORAGE PRFO and Howden Joinery Group, you can compare the effects of market volatilities on PUBLIC STORAGE and Howden Joinery 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 Howden Joinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of PUBLIC STORAGE and Howden Joinery.

Diversification Opportunities for PUBLIC STORAGE and Howden Joinery

0.49

Correlation Coefficient

PUBLIC STORAGE  Howden Joinery

Very weak diversification

The 3 months correlation between PUBLIC and Howden is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PUBLIC STORAGE PRFO and Howden Joinery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howden Joinery Group 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 PRFO are associated (or correlated) with Howden Joinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howden Joinery Group has no effect on the direction of PUBLIC STORAGE i.e., PUBLIC STORAGE and Howden Joinery go up and down completely randomly.

Pair Corralation between PUBLIC STORAGE and Howden Joinery

Assuming the 90 days trading horizon PUBLIC STORAGE PRFO is expected to under-perform the Howden Joinery. But the stock apears to be less risky and, when comparing its historical volatility, PUBLIC STORAGE PRFO is 1.34 times less risky than Howden Joinery. The stock trades about -0.15 of its potential returns per unit of risk. The Howden Joinery Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  985.00  in Howden Joinery Group on September 20, 2024 and sell it today you would lose (18.00) from holding Howden Joinery Group or give up 1.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

PUBLIC STORAGE PRFO  vs.  Howden Joinery Group

PUBLIC STORAGE PRFO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PUBLIC STORAGE PRFO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PUBLIC STORAGE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Howden Joinery Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Howden Joinery Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PUBLIC STORAGE and Howden Joinery

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

The idea behind PUBLIC STORAGE PRFO and Howden Joinery Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.