Correlation Between Hitachi Construction and National Storage
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction 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 Hitachi Construction and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Construction Machinery and National Storage Affiliates, you can compare the effects of market volatilities on Hitachi Construction 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 Hitachi Construction with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and National Storage.
Diversification Opportunities for Hitachi Construction and National Storage
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hitachi and National is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery 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 Hitachi Construction 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 Hitachi Construction Machinery 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 Hitachi Construction i.e., Hitachi Construction and National Storage go up and down completely randomly.
Pair Corralation between Hitachi Construction and National Storage
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 1.05 times more return on investment than National Storage. However, Hitachi Construction is 1.05 times more volatile than National Storage Affiliates. It trades about 0.19 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 2,000 in Hitachi Construction Machinery on September 20, 2024 and sell it today you would earn a total of 100.00 from holding Hitachi Construction Machinery or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. National Storage Affiliates
Performance |
| Timeline |
| Hitachi Construction |
| National Storage Aff |
Hitachi Construction and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and National Storage
The main advantage of trading using opposite Hitachi Construction and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction 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.| Hitachi Construction vs. Superior Plus Corp | Hitachi Construction vs. SIVERS SEMICONDUCTORS AB | Hitachi Construction vs. NorAm Drilling AS | Hitachi Construction vs. Norsk Hydro ASA |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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