Correlation Between Insignia Financial and National Storage
Can any of the company-specific risk be diversified away by investing in both Insignia Financial 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 Insignia Financial and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insignia Financial and National Storage REIT, you can compare the effects of market volatilities on Insignia Financial 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 Insignia Financial with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insignia Financial and National Storage.
Diversification Opportunities for Insignia Financial and National Storage
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Insignia and National is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial 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 Insignia Financial 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 Insignia Financial 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 Insignia Financial i.e., Insignia Financial and National Storage go up and down completely randomly.
Pair Corralation between Insignia Financial and National Storage
Assuming the 90 days trading horizon Insignia Financial is expected to generate 2.72 times more return on investment than National Storage. However, Insignia Financial is 2.72 times more volatile than National Storage REIT. It trades about 0.12 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 210.00 in Insignia Financial on November 3, 2024 and sell it today you would earn a total of 233.00 from holding Insignia Financial or generate 110.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insignia Financial vs. National Storage REIT
Performance |
| Timeline |
| Insignia Financial |
| National Storage REIT |
Insignia Financial and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insignia Financial and National Storage
The main advantage of trading using opposite Insignia Financial and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial 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.| Insignia Financial vs. Aneka Tambang Tbk | Insignia Financial vs. BHP Group Limited | Insignia Financial vs. Ecofibre | Insignia Financial vs. iShares Global Healthcare |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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