Correlation Between National Storage and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both National Storage and ETFS Coffee 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 ETFS Coffee 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 ETFS Coffee ETC, you can compare the effects of market volatilities on National Storage and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and ETFS Coffee.
Diversification Opportunities for National Storage and ETFS Coffee
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and ETFS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of National Storage i.e., National Storage and ETFS Coffee go up and down completely randomly.
Pair Corralation between National Storage and ETFS Coffee
Assuming the 90 days horizon National Storage is expected to generate 10.86 times less return on investment than ETFS Coffee. But when comparing it to its historical volatility, National Storage Affiliates is 1.36 times less risky than ETFS Coffee. It trades about 0.04 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,596 in ETFS Coffee ETC on September 2, 2024 and sell it today you would earn a total of 1,663 from holding ETFS Coffee ETC or generate 46.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
National Storage Affiliates vs. ETFS Coffee ETC
Performance |
| Timeline |
| National Storage Aff |
| ETFS Coffee ETC |
National Storage and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and ETFS Coffee
The main advantage of trading using opposite National Storage and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| National Storage vs. Extra Space Storage | National Storage vs. Superior Plus Corp | National Storage vs. NMI Holdings | National Storage vs. Origin Agritech |
| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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