Correlation Between National Storage and NOW
Can any of the company-specific risk be diversified away by investing in both National Storage and NOW 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 National Storage and NOW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage Affiliates and NOW Inc, you can compare the effects of market volatilities on National Storage and NOW 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 National Storage with a short position of NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and NOW.
Diversification Opportunities for National Storage and NOW
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and NOW is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW Inc and National 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 National Storage Affiliates are associated (or correlated) with NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of National Storage i.e., National Storage and NOW go up and down completely randomly.
Pair Corralation between National Storage and NOW
Assuming the 90 days horizon National Storage is expected to generate 2.4 times less return on investment than NOW. But when comparing it to its historical volatility, National Storage Affiliates is 2.38 times less risky than NOW. It trades about 0.19 of its potential returns per unit of risk. NOW Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,420 in NOW Inc on November 28, 2024 and sell it today you would earn a total of 240.00 from holding NOW Inc or generate 16.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Storage Affiliates vs. NOW Inc
Performance |
| Timeline |
| National Storage Aff |
| NOW Inc |
National Storage and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and NOW
The main advantage of trading using opposite National Storage and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| National Storage vs. Extra Space Storage | National Storage vs. REXFORD INDREALTY DL 01 | National Storage vs. CubeSmart | National Storage vs. First Industrial Realty |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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