Correlation Between Innovative Industrial and National Storage
Can any of the company-specific risk be diversified away by investing in both Innovative Industrial 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 Innovative Industrial and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Industrial Properties and National Storage Affiliates, you can compare the effects of market volatilities on Innovative Industrial 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 Innovative Industrial with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Industrial and National Storage.
Diversification Opportunities for Innovative Industrial and National Storage
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innovative and National is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Industrial Properti 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 Innovative Industrial 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 Innovative Industrial Properties 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 Innovative Industrial i.e., Innovative Industrial and National Storage go up and down completely randomly.
Pair Corralation between Innovative Industrial and National Storage
Given the investment horizon of 90 days Innovative Industrial Properties is expected to generate 2.1 times more return on investment than National Storage. However, Innovative Industrial is 2.1 times more volatile than National Storage Affiliates. It trades about 0.22 of its potential returns per unit of risk. National Storage Affiliates is currently generating about 0.08 per unit of risk. If you would invest 6,544 in Innovative Industrial Properties on November 9, 2024 and sell it today you would earn a total of 859.00 from holding Innovative Industrial Properties or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Industrial Properti vs. National Storage Affiliates
Performance |
| Timeline |
| Innovative Industrial |
| National Storage Aff |
Innovative Industrial and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Industrial and National Storage
The main advantage of trading using opposite Innovative Industrial and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Industrial 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.| Innovative Industrial vs. Prologis | Innovative Industrial vs. Public Storage | Innovative Industrial vs. Extra Space Storage | Innovative Industrial vs. CubeSmart |
| National Storage vs. Extra Space Storage | National Storage vs. Americold Realty Trust | National Storage vs. Public Storage | National Storage vs. Terreno Realty |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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