Correlation Between ARISTOCRAT LEISURE and National Storage
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and National Storage 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 ARISTOCRAT LEISURE and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and National Storage Affiliates, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and National Storage 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 ARISTOCRAT LEISURE with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and National Storage.
Diversification Opportunities for ARISTOCRAT LEISURE and National Storage
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ARISTOCRAT and National is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE are associated (or correlated) with National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and National Storage go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and National Storage
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.65 times more return on investment than National Storage. However, ARISTOCRAT LEISURE is 1.54 times less risky than National Storage. It trades about 0.15 of its potential returns per unit of risk. National Storage Affiliates is currently generating about 0.05 per unit of risk. If you would invest 2,235 in ARISTOCRAT LEISURE on August 31, 2024 and sell it today you would earn a total of 1,925 from holding ARISTOCRAT LEISURE or generate 86.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. National Storage Affiliates
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| National Storage Aff |
ARISTOCRAT LEISURE and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and National Storage
The main advantage of trading using opposite ARISTOCRAT LEISURE and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage's long position.| ARISTOCRAT LEISURE vs. SIVERS SEMICONDUCTORS AB | ARISTOCRAT LEISURE vs. Darden Restaurants | ARISTOCRAT LEISURE vs. Reliance Steel Aluminum | ARISTOCRAT LEISURE vs. Q2M Managementberatung AG |
| National Storage vs. Extra Space Storage | National Storage vs. GLADSTONE LAND L 001 | National Storage vs. Superior Plus Corp | National Storage vs. NMI Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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