Correlation Between Hotel Property and National Storage
Can any of the company-specific risk be diversified away by investing in both Hotel Property 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 Hotel Property and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Property Investments and National Storage REIT, you can compare the effects of market volatilities on Hotel Property 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 Hotel Property with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and National Storage.
Diversification Opportunities for Hotel Property and National Storage
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hotel and National is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments 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 Hotel Property 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 Hotel Property Investments 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 Hotel Property i.e., Hotel Property and National Storage go up and down completely randomly.
Pair Corralation between Hotel Property and National Storage
Assuming the 90 days trading horizon Hotel Property Investments is expected to generate 0.66 times more return on investment than National Storage. However, Hotel Property Investments is 1.51 times less risky than National Storage. It trades about 0.41 of its potential returns per unit of risk. National Storage REIT is currently generating about 0.11 per unit of risk. If you would invest 349.00 in Hotel Property Investments on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Hotel Property Investments or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Property Investments vs. National Storage REIT
Performance |
| Timeline |
| Hotel Property Inves |
| National Storage REIT |
Hotel Property and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and National Storage
The main advantage of trading using opposite Hotel Property and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property 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.| Hotel Property vs. Australian Unity Office | Hotel Property vs. Champion Iron | Hotel Property vs. Ridley | Hotel Property vs. Peel Mining |
| National Storage vs. Australian Unity Office | National Storage vs. Champion Iron | National Storage vs. Ridley | National Storage vs. Peel Mining |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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