Correlation Between Terreno Realty and Public Storage

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

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

Diversification Opportunities for Terreno Realty and Public Storage

0.24

Correlation Coefficient

Terreno Realty  Public Storage

Modest diversification

The 3 months correlation between Terreno and Public is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Terreno Realty and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and Terreno Realty 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 Terreno Realty are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Terreno Realty i.e., Terreno Realty and Public Storage go up and down completely randomly.

Pair Corralation between Terreno Realty and Public Storage

Given the investment horizon of 90 days Terreno Realty is expected to under-perform the Public Storage. In addition to that, Terreno Realty is 2.8 times more volatile than Public Storage. It trades about -0.14 of its total potential returns per unit of risk. Public Storage is currently generating about 0.01 per unit of volatility. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Terreno Realty  vs.  Public Storage

Terreno Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terreno Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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.

Pair Trading with Terreno Realty and Public Storage

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

The idea behind Terreno Realty and Public 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.