Correlation Between Cromwell Property and National Storage
Can any of the company-specific risk be diversified away by investing in both Cromwell Property 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 Cromwell Property and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cromwell Property Group and National Storage REIT, you can compare the effects of market volatilities on Cromwell Property 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 Cromwell Property with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cromwell Property and National Storage.
Diversification Opportunities for Cromwell Property and National Storage
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cromwell and National is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cromwell Property Group and National Storage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage REIT and Cromwell Property 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 Cromwell Property Group 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 REIT has no effect on the direction of Cromwell Property i.e., Cromwell Property and National Storage go up and down completely randomly.
Pair Corralation between Cromwell Property and National Storage
Assuming the 90 days trading horizon Cromwell Property Group is expected to generate 2.97 times more return on investment than National Storage. However, Cromwell Property is 2.97 times more volatile than National Storage REIT. It trades about 0.18 of its potential returns per unit of risk. National Storage REIT is currently generating about -0.14 per unit of risk. If you would invest 37.00 in Cromwell Property Group on October 23, 2024 and sell it today you would earn a total of 3.00 from holding Cromwell Property Group or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cromwell Property Group vs. National Storage REIT
Performance |
| Timeline |
| Cromwell Property |
| National Storage REIT |
Cromwell Property and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cromwell Property and National Storage
The main advantage of trading using opposite Cromwell Property and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cromwell Property 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.| Cromwell Property vs. Sports Entertainment Group | Cromwell Property vs. G8 Education | Cromwell Property vs. Retail Food Group | Cromwell Property vs. Actinogen Medical |
| National Storage vs. Scentre Group | National Storage vs. Vicinity Centres Re | National Storage vs. Charter Hall Retail | National Storage vs. Cromwell Property Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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