Correlation Between National Storage and First Industrial
Can any of the company-specific risk be diversified away by investing in both National Storage and First 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 National Storage and First Industrial 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 First Industrial Realty, you can compare the effects of market volatilities on National Storage and First 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 National Storage with a short position of First Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and First Industrial.
Diversification Opportunities for National Storage and First Industrial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and First is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and First Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Industrial Realty 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 First Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Industrial Realty has no effect on the direction of National Storage i.e., National Storage and First Industrial go up and down completely randomly.
Pair Corralation between National Storage and First Industrial
Assuming the 90 days horizon National Storage Affiliates is expected to generate 1.24 times more return on investment than First Industrial. However, National Storage is 1.24 times more volatile than First Industrial Realty. It trades about 0.08 of its potential returns per unit of risk. First Industrial Realty is currently generating about 0.07 per unit of risk. If you would invest 2,819 in National Storage Affiliates on September 15, 2024 and sell it today you would earn a total of 1,111 from holding National Storage Affiliates or generate 39.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage Affiliates vs. First Industrial Realty
Performance |
| Timeline |
| National Storage Aff |
| First Industrial Realty |
National Storage and First Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and First Industrial
The main advantage of trading using opposite National Storage and First Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, First 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 First Industrial will offset losses from the drop in First Industrial'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 |
| First Industrial vs. Extra Space Storage | First Industrial vs. REXFORD INDREALTY DL 01 | First Industrial vs. CubeSmart | First Industrial vs. National Storage Affiliates |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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