Correlation Between Industrial Logistics and National Storage
Can any of the company-specific risk be diversified away by investing in both Industrial Logistics 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 Industrial Logistics and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Logistics Properties and National Storage Affiliates, you can compare the effects of market volatilities on Industrial Logistics 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 Industrial Logistics with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Logistics and National Storage.
Diversification Opportunities for Industrial Logistics and National Storage
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Industrial and National is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Logistics Propertie 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 Industrial Logistics 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 Industrial Logistics 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 Industrial Logistics i.e., Industrial Logistics and National Storage go up and down completely randomly.
Pair Corralation between Industrial Logistics and National Storage
Given the investment horizon of 90 days Industrial Logistics Properties is expected to generate 3.58 times more return on investment than National Storage. However, Industrial Logistics is 3.58 times more volatile than National Storage Affiliates. It trades about 0.02 of its potential returns per unit of risk. National Storage Affiliates is currently generating about 0.03 per unit of risk. If you would invest 368.00 in Industrial Logistics Properties on August 24, 2024 and sell it today you would earn a total of 2.00 from holding Industrial Logistics Properties or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Logistics Propertie vs. National Storage Affiliates
Performance |
| Timeline |
| Industrial Logistics |
| National Storage Aff |
Industrial Logistics and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Logistics and National Storage
The main advantage of trading using opposite Industrial Logistics and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Logistics 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.| Industrial Logistics vs. Terreno Realty | Industrial Logistics vs. LXP Industrial Trust | Industrial Logistics vs. Rexford Industrial Realty | Industrial Logistics vs. First Industrial Realty |
| National Storage vs. Rexford Industrial Realty | National Storage vs. Kimco Realty | National Storage vs. Kimco Realty | National Storage vs. EPR Properties |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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