Correlation Between Montea Comm and CubeSmart
Can any of the company-specific risk be diversified away by investing in both Montea Comm and CubeSmart 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 Montea Comm and CubeSmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montea Comm VA and CubeSmart, you can compare the effects of market volatilities on Montea Comm and CubeSmart 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 Montea Comm with a short position of CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montea Comm and CubeSmart.
Diversification Opportunities for Montea Comm and CubeSmart
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Montea and CubeSmart is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Montea Comm VA and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart and Montea Comm 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 Montea Comm VA are associated (or correlated) with CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Montea Comm i.e., Montea Comm and CubeSmart go up and down completely randomly.
Pair Corralation between Montea Comm and CubeSmart
Assuming the 90 days horizon Montea Comm VA is expected to under-perform the CubeSmart. But the stock apears to be less risky and, when comparing its historical volatility, Montea Comm VA is 1.03 times less risky than CubeSmart. The stock trades about -0.02 of its potential returns per unit of risk. The CubeSmart is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,414 in CubeSmart on September 14, 2024 and sell it today you would earn a total of 1,024 from holding CubeSmart or generate 29.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Montea Comm VA vs. CubeSmart
Performance |
| Timeline |
| Montea Comm VA |
| CubeSmart |
Montea Comm and CubeSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montea Comm and CubeSmart
The main advantage of trading using opposite Montea Comm and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montea Comm position performs unexpectedly, CubeSmart 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 CubeSmart will offset losses from the drop in CubeSmart's long position.| Montea Comm vs. Extra Space Storage | Montea Comm vs. REXFORD INDREALTY DL 01 | Montea Comm vs. CubeSmart | Montea Comm vs. First Industrial Realty |
| CubeSmart vs. Extra Space Storage | CubeSmart vs. REXFORD INDREALTY DL 01 | CubeSmart vs. First Industrial Realty | CubeSmart vs. Warehouses De Pauw |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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