Correlation Between Global Self and Plymouth Industrial

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

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

Diversification Opportunities for Global Self and Plymouth Industrial

0.4

Correlation Coefficient

Global Self  Plymouth Industrial

Very weak diversification

The 3 months correlation between Global and Plymouth is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Global Self Storage and Plymouth Industrial REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plymouth Industrial REIT and Global Self 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 Global Self Storage are associated (or correlated) with Plymouth Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plymouth Industrial REIT has no effect on the direction of Global Self i.e., Global Self and Plymouth Industrial go up and down completely randomly.

Pair Corralation between Global Self and Plymouth Industrial

Given the investment horizon of 90 days Global Self Storage is expected to generate 0.65 times more return on investment than Plymouth Industrial. However, Global Self Storage is 1.53 times less risky than Plymouth Industrial. It trades about -0.05 of its potential returns per unit of risk. Plymouth Industrial REIT is currently generating about -0.04 per unit of risk. If you would invest  521.00  in Global Self Storage on December 29, 2024 and sell it today you would lose (16.00) from holding Global Self Storage or give up 3.07% of portfolio value over 90 days.

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

Global Self Storage  vs.  Plymouth Industrial REIT

Global Self Storage

Risk-Adjusted Performance

Very Weak

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

Plymouth Industrial REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plymouth Industrial REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Plymouth Industrial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global Self and Plymouth Industrial

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

The idea behind Global Self Storage and Plymouth Industrial REIT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.