Correlation Between CubeSmart and Plymouth Industrial
Can any of the company-specific risk be diversified away by investing in both CubeSmart and Plymouth Industrial 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 Plymouth Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubeSmart and Plymouth Industrial REIT, you can compare the effects of market volatilities on CubeSmart and Plymouth Industrial 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 Plymouth Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and Plymouth Industrial.
Diversification Opportunities for CubeSmart and Plymouth Industrial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CubeSmart and Plymouth is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and Plymouth Industrial REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plymouth Industrial REIT 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 Plymouth Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plymouth Industrial REIT has no effect on the direction of CubeSmart i.e., CubeSmart and Plymouth Industrial go up and down completely randomly.
Pair Corralation between CubeSmart and Plymouth Industrial
Given the investment horizon of 90 days CubeSmart is expected to generate 0.79 times more return on investment than Plymouth Industrial. However, CubeSmart is 1.26 times less risky than Plymouth Industrial. It trades about -0.03 of its potential returns per unit of risk. Plymouth Industrial REIT is currently generating about -0.25 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CubeSmart vs. Plymouth Industrial REIT
Performance |
| Timeline |
| CubeSmart |
| Plymouth Industrial REIT |
CubeSmart and Plymouth Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubeSmart and Plymouth Industrial
The main advantage of trading using opposite CubeSmart and Plymouth Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubeSmart position performs unexpectedly, Plymouth Industrial 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 Plymouth Industrial will offset losses from the drop in Plymouth Industrial's long position.| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space Storage |
| Plymouth Industrial vs. Rexford Industrial Realty | Plymouth Industrial vs. EastGroup Properties | Plymouth Industrial vs. LXP Industrial Trust | Plymouth Industrial vs. First Industrial Realty |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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