Correlation Between Nasdaq and National Storage
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and National Storage REIT, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and National Storage.
Diversification Opportunities for Nasdaq and National Storage
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq and National is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and National Storage go up and down completely randomly.
Pair Corralation between Nasdaq and National Storage
Given the investment horizon of 90 days Nasdaq is expected to generate 1.55 times less return on investment than National Storage. But when comparing it to its historical volatility, Nasdaq Inc is 2.89 times less risky than National Storage. It trades about 0.04 of its potential returns per unit of risk. National Storage REIT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 140.00 in National Storage REIT on October 12, 2024 and sell it today you would earn a total of 5.00 from holding National Storage REIT or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.58% |
| Values | Daily Returns |
Nasdaq Inc vs. National Storage REIT
Performance |
| Timeline |
| Nasdaq Inc |
| National Storage REIT |
Nasdaq and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and National Storage
The main advantage of trading using opposite Nasdaq and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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.The idea behind Nasdaq Inc and National Storage REIT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| National Storage vs. Bright Scholar Education | National Storage vs. Vasta Platform | National Storage vs. California Engels Mining | National Storage vs. Perseus Mining Limited |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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