Correlation Between DY6 Metals and National Storage
Can any of the company-specific risk be diversified away by investing in both DY6 Metals 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 DY6 Metals and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DY6 Metals and National Storage REIT, you can compare the effects of market volatilities on DY6 Metals 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 DY6 Metals with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and National Storage.
Diversification Opportunities for DY6 Metals and National Storage
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DY6 and National is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals 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 DY6 Metals 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 DY6 Metals 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 DY6 Metals i.e., DY6 Metals and National Storage go up and down completely randomly.
Pair Corralation between DY6 Metals and National Storage
Assuming the 90 days trading horizon DY6 Metals is expected to generate 21.73 times more return on investment than National Storage. However, DY6 Metals is 21.73 times more volatile than National Storage REIT. It trades about 0.03 of its potential returns per unit of risk. National Storage REIT is currently generating about 0.01 per unit of risk. If you would invest 6.30 in DY6 Metals on November 3, 2024 and sell it today you would lose (2.30) from holding DY6 Metals or give up 36.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DY6 Metals vs. National Storage REIT
Performance |
| Timeline |
| DY6 Metals |
| National Storage REIT |
DY6 Metals and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DY6 Metals and National Storage
The main advantage of trading using opposite DY6 Metals and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals 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.| DY6 Metals vs. Gold Road Resources | DY6 Metals vs. ARN Media Limited | DY6 Metals vs. Spirit Telecom | DY6 Metals vs. Saferoads Holdings |
| National Storage vs. Charter Hall Retail | National Storage vs. Cromwell Property Group | National Storage vs. Australian Unity Office | National Storage vs. Ecofibre |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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