Correlation Between Life Storage and Plymouth Industrial

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

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

Diversification Opportunities for Life Storage and Plymouth Industrial

-0.3

Correlation Coefficient

Life Storage  Plymouth Industrial

Very good diversification

The 3 months correlation between Life and Plymouth is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Life 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 Life 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 Life 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 Life Storage i.e., Life Storage and Plymouth Industrial go up and down completely randomly.

Pair Corralation between Life Storage and Plymouth Industrial

If you would invest  13,310  in Life Storage on February 4, 2024 and sell it today you would earn a total of  0.00  from holding Life Storage or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Life Storage  vs.  Plymouth Industrial REIT

Life Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Life Storage is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Plymouth Industrial REIT

Risk-Adjusted Performance

0 of 100

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 Life Storage and Plymouth Industrial

The main advantage of trading using opposite Life Storage and Plymouth Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Storage 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 Life 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.