Correlation Between National Storage and Public Storage

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Can any of the company-specific risk be diversified away by investing in both National Storage and Public 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 National Storage and Public Storage 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 Public Storage, you can compare the effects of market volatilities on National Storage and Public 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 National Storage with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Public Storage.

Diversification Opportunities for National Storage and Public Storage

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between National and Public is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage 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 Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of National Storage i.e., National Storage and Public Storage go up and down completely randomly.

Pair Corralation between National Storage and Public Storage

Assuming the 90 days trading horizon National Storage Affiliates is expected to generate 3.09 times more return on investment than Public Storage. However, National Storage is 3.09 times more volatile than Public Storage. It trades about 0.01 of its potential returns per unit of risk. Public Storage is currently generating about 0.01 per unit of risk. If you would invest  2,263  in National Storage Affiliates on August 28, 2024 and sell it today you would lose (27.00) from holding National Storage Affiliates or give up 1.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy40.19%
ValuesDaily Returns

National Storage Affiliates  vs.  Public Storage

 Performance 
       Timeline  
National Storage Aff 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in National Storage Affiliates are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, National Storage may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Public Storage 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Public Storage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

National Storage and Public Storage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Storage and Public Storage

The main advantage of trading using opposite National Storage and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Public 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 Public Storage will offset losses from the drop in Public Storage's long position.
The idea behind National Storage Affiliates and Public Storage 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.
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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