Correlation Between National Storage and CubeSmart
Can any of the company-specific risk be diversified away by investing in both National Storage and CubeSmart 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 CubeSmart 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 CubeSmart, you can compare the effects of market volatilities on National Storage and CubeSmart 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 CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and CubeSmart.
Diversification Opportunities for National Storage and CubeSmart
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and CubeSmart is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart 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 CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of National Storage i.e., National Storage and CubeSmart go up and down completely randomly.
Pair Corralation between National Storage and CubeSmart
Assuming the 90 days horizon National Storage Affiliates is expected to generate 1.49 times more return on investment than CubeSmart. However, National Storage is 1.49 times more volatile than CubeSmart. It trades about 0.22 of its potential returns per unit of risk. CubeSmart is currently generating about 0.21 per unit of risk. If you would invest 3,884 in National Storage Affiliates on September 1, 2024 and sell it today you would earn a total of 391.00 from holding National Storage Affiliates or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Storage Affiliates vs. CubeSmart
Performance |
| Timeline |
| National Storage Aff |
| CubeSmart |
National Storage and CubeSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and CubeSmart
The main advantage of trading using opposite National Storage and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, CubeSmart 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 CubeSmart will offset losses from the drop in CubeSmart'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 |
| CubeSmart vs. Coor Service Management | CubeSmart vs. Consolidated Communications Holdings | CubeSmart vs. Cogent Communications Holdings | CubeSmart vs. SK TELECOM TDADR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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