Correlation Between National Storage and Terreno Realty
Can any of the company-specific risk be diversified away by investing in both National Storage and Terreno 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 Terreno 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 Terreno Realty, you can compare the effects of market volatilities on National Storage and Terreno 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 Terreno Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Terreno Realty.
Diversification Opportunities for National Storage and Terreno Realty
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Terreno is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Terreno Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terreno Realty 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 Terreno Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terreno Realty has no effect on the direction of National Storage i.e., National Storage and Terreno Realty go up and down completely randomly.
Pair Corralation between National Storage and Terreno Realty
Assuming the 90 days trading horizon National Storage Affiliates is expected to generate 0.25 times more return on investment than Terreno Realty. However, National Storage Affiliates is 4.07 times less risky than Terreno Realty. It trades about -0.22 of its potential returns per unit of risk. Terreno Realty is currently generating about -0.18 per unit of risk. If you would invest 2,253 in National Storage Affiliates on August 24, 2024 and sell it today you would lose (35.00) from holding National Storage Affiliates or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage Affiliates vs. Terreno Realty
Performance |
| Timeline |
| National Storage Aff |
| Terreno Realty |
National Storage and Terreno Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Terreno Realty
The main advantage of trading using opposite National Storage and Terreno Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Terreno 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 Terreno Realty will offset losses from the drop in Terreno Realty's long position.| National Storage vs. National Storage Affiliates | National Storage vs. Innovative Industrial Properties | National Storage vs. Industrial Logistics Properties | National Storage vs. Public Storage |
| Terreno Realty vs. Plymouth Industrial REIT | Terreno Realty vs. EastGroup Properties | Terreno Realty vs. LXP Industrial Trust | Terreno Realty vs. First Industrial Realty |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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