Correlation Between CubeSmart and Prologis
Can any of the company-specific risk be diversified away by investing in both CubeSmart and Prologis 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 CubeSmart and Prologis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubeSmart and Prologis, you can compare the effects of market volatilities on CubeSmart and Prologis 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 CubeSmart with a short position of Prologis. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and Prologis.
Diversification Opportunities for CubeSmart and Prologis
Very poor diversification
The 3 months correlation between CubeSmart and Prologis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis and CubeSmart 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 CubeSmart are associated (or correlated) with Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of CubeSmart i.e., CubeSmart and Prologis go up and down completely randomly.
Pair Corralation between CubeSmart and Prologis
Given the investment horizon of 90 days CubeSmart is expected to generate 1.24 times more return on investment than Prologis. However, CubeSmart is 1.24 times more volatile than Prologis. It trades about -0.03 of its potential returns per unit of risk. Prologis is currently generating about -0.18 per unit of risk. If you would invest 4,930 in CubeSmart on August 24, 2024 and sell it today you would lose (70.00) from holding CubeSmart or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CubeSmart vs. Prologis
Performance |
| Timeline |
| CubeSmart |
| Prologis |
CubeSmart and Prologis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubeSmart and Prologis
The main advantage of trading using opposite CubeSmart and Prologis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubeSmart position performs unexpectedly, Prologis 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 Prologis will offset losses from the drop in Prologis' long position.| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space Storage |
| Prologis vs. Extra Space Storage | Prologis vs. CubeSmart | Prologis vs. STAG Industrial | Prologis vs. Innovative Industrial Properties |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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