Correlation Between United Breweries and National Storage
Can any of the company-specific risk be diversified away by investing in both United Breweries 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 United Breweries and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and National Storage Affiliates, you can compare the effects of market volatilities on United Breweries 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 United Breweries with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and National Storage.
Diversification Opportunities for United Breweries and National Storage
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and National is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co 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 United Breweries 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 United Breweries Co 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 United Breweries i.e., United Breweries and National Storage go up and down completely randomly.
Pair Corralation between United Breweries and National Storage
Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.1 times more return on investment than National Storage. However, United Breweries is 1.1 times more volatile than National Storage Affiliates. It trades about 0.24 of its potential returns per unit of risk. National Storage Affiliates is currently generating about -0.11 per unit of risk. If you would invest 995.00 in United Breweries Co on September 20, 2024 and sell it today you would earn a total of 65.00 from holding United Breweries Co or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. National Storage Affiliates
Performance |
| Timeline |
| United Breweries |
| National Storage Aff |
United Breweries and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and National Storage
The main advantage of trading using opposite United Breweries and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| National Storage vs. Commercial Vehicle Group | National Storage vs. LGI Homes | National Storage vs. Carsales | National Storage vs. Tri Pointe Homes |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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