Correlation Between EROAD and National Storage
Can any of the company-specific risk be diversified away by investing in both EROAD 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 EROAD and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and National Storage REIT, you can compare the effects of market volatilities on EROAD 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 EROAD with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and National Storage.
Diversification Opportunities for EROAD and National Storage
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EROAD and National is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding EROAD 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 EROAD 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 EROAD 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 EROAD i.e., EROAD and National Storage go up and down completely randomly.
Pair Corralation between EROAD and National Storage
Assuming the 90 days trading horizon EROAD is expected to generate 2.19 times more return on investment than National Storage. However, EROAD is 2.19 times more volatile than National Storage REIT. It trades about 0.14 of its potential returns per unit of risk. National Storage REIT is currently generating about 0.12 per unit of risk. If you would invest 79.00 in EROAD on August 29, 2024 and sell it today you would earn a total of 5.00 from holding EROAD or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. National Storage REIT
Performance |
| Timeline |
| EROAD |
| National Storage REIT |
EROAD and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and National Storage
The main advantage of trading using opposite EROAD and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD 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.| EROAD vs. Navigator Global Investments | EROAD vs. Super Retail Group | EROAD vs. Regal Investment | EROAD vs. Australian United Investment |
| National Storage vs. Scentre Group | National Storage vs. Vicinity Centres Re | National Storage vs. Charter Hall Retail | National Storage vs. Cromwell Property Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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