Correlation Between CubeSmart and STAG Industrial
Can any of the company-specific risk be diversified away by investing in both CubeSmart and STAG 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 STAG Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubeSmart and STAG Industrial, you can compare the effects of market volatilities on CubeSmart and STAG 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 STAG Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and STAG Industrial.
Diversification Opportunities for CubeSmart and STAG Industrial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CubeSmart and STAG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and STAG Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial 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 STAG Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial has no effect on the direction of CubeSmart i.e., CubeSmart and STAG Industrial go up and down completely randomly.
Pair Corralation between CubeSmart and STAG Industrial
Given the investment horizon of 90 days CubeSmart is expected to generate 1.33 times more return on investment than STAG Industrial. However, CubeSmart is 1.33 times more volatile than STAG Industrial. It trades about -0.03 of its potential returns per unit of risk. STAG Industrial is currently generating about -0.16 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. STAG Industrial
Performance |
| Timeline |
| CubeSmart |
| STAG Industrial |
CubeSmart and STAG Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubeSmart and STAG Industrial
The main advantage of trading using opposite CubeSmart and STAG Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubeSmart position performs unexpectedly, STAG 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 STAG Industrial will offset losses from the drop in STAG Industrial's long position.| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space Storage |
| STAG Industrial vs. Public Storage | STAG Industrial vs. Extra Space Storage | STAG Industrial vs. Rexford Industrial Realty | STAG Industrial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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