Correlation Between North American and National Storage
Can any of the company-specific risk be diversified away by investing in both North American 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 North American and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and National Storage Affiliates, you can compare the effects of market volatilities on North American 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 North American with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and National Storage.
Diversification Opportunities for North American and National Storage
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between North and National is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction 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 North American 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 North American Construction 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 North American i.e., North American and National Storage go up and down completely randomly.
Pair Corralation between North American and National Storage
Assuming the 90 days horizon North American Construction is expected to generate 1.67 times more return on investment than National Storage. However, North American is 1.67 times more volatile than National Storage Affiliates. It trades about 0.03 of its potential returns per unit of risk. National Storage Affiliates is currently generating about 0.04 per unit of risk. If you would invest 1,635 in North American Construction on September 19, 2024 and sell it today you would earn a total of 285.00 from holding North American Construction or generate 17.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. National Storage Affiliates
Performance |
| Timeline |
| North American Const |
| National Storage Aff |
North American and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and National Storage
The main advantage of trading using opposite North American and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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.| North American vs. NORTHEAST UTILITIES | North American vs. SK TELECOM TDADR | North American vs. SINGAPORE AIRLINES | North American vs. Gol Intelligent Airlines |
| National Storage vs. DAIRY FARM INTL | National Storage vs. United Breweries Co | National Storage vs. Hitachi Construction Machinery | National Storage vs. North American Construction |
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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