Correlation Between National Storage and Automatic Data
Can any of the company-specific risk be diversified away by investing in both National Storage and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on National Storage and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Automatic Data.
Diversification Opportunities for National Storage and Automatic Data
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Automatic is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of National Storage i.e., National Storage and Automatic Data go up and down completely randomly.
Pair Corralation between National Storage and Automatic Data
Assuming the 90 days horizon National Storage is expected to generate 1.26 times less return on investment than Automatic Data. In addition to that, National Storage is 1.41 times more volatile than Automatic Data Processing. It trades about 0.05 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.09 per unit of volatility. If you would invest 19,328 in Automatic Data Processing on August 31, 2024 and sell it today you would earn a total of 9,782 from holding Automatic Data Processing or generate 50.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
National Storage Affiliates vs. Automatic Data Processing
Performance |
| Timeline |
| National Storage Aff |
| Automatic Data Processing |
National Storage and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Automatic Data
The main advantage of trading using opposite National Storage and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| National Storage vs. Extra Space Storage | National Storage vs. GLADSTONE LAND L 001 | National Storage vs. Superior Plus Corp | National Storage vs. NMI Holdings |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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