Correlation Between National Storage and Lexington Realty
Can any of the company-specific risk be diversified away by investing in both National Storage and Lexington Realty 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 National Storage and Lexington Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage Affiliates and Lexington Realty Trust, you can compare the effects of market volatilities on National Storage and Lexington Realty 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 National Storage with a short position of Lexington Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Lexington Realty.
Diversification Opportunities for National Storage and Lexington Realty
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Lexington is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Lexington Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexington Realty Trust and National Storage 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 National Storage Affiliates are associated (or correlated) with Lexington Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexington Realty Trust has no effect on the direction of National Storage i.e., National Storage and Lexington Realty go up and down completely randomly.
Pair Corralation between National Storage and Lexington Realty
Assuming the 90 days trading horizon National Storage is expected to generate 1.36 times less return on investment than Lexington Realty. In addition to that, National Storage is 1.16 times more volatile than Lexington Realty Trust. It trades about 0.03 of its total potential returns per unit of risk. Lexington Realty Trust is currently generating about 0.04 per unit of volatility. If you would invest 4,186 in Lexington Realty Trust on August 31, 2024 and sell it today you would earn a total of 794.00 from holding Lexington Realty Trust or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage Affiliates vs. Lexington Realty Trust
Performance |
| Timeline |
| National Storage Aff |
| Lexington Realty Trust |
National Storage and Lexington Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Lexington Realty
The main advantage of trading using opposite National Storage and Lexington Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Lexington Realty 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 Lexington Realty will offset losses from the drop in Lexington Realty's long position.| National Storage vs. Rexford Industrial Realty | National Storage vs. Kimco Realty | National Storage vs. Kimco Realty | National Storage vs. EPR Properties |
| Lexington Realty vs. Prologis | Lexington Realty vs. Public Storage | Lexington Realty vs. LXP Industrial Trust | Lexington Realty vs. Plymouth Industrial REIT |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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