Correlation Between National Storage and Adacel Tech
Can any of the company-specific risk be diversified away by investing in both National Storage and Adacel Tech 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 Adacel Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage REIT and Adacel Tech, you can compare the effects of market volatilities on National Storage and Adacel Tech 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 Adacel Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Adacel Tech.
Diversification Opportunities for National Storage and Adacel Tech
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Adacel is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Adacel Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adacel Tech 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 REIT are associated (or correlated) with Adacel Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adacel Tech has no effect on the direction of National Storage i.e., National Storage and Adacel Tech go up and down completely randomly.
Pair Corralation between National Storage and Adacel Tech
Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.28 times more return on investment than Adacel Tech. However, National Storage REIT is 3.51 times less risky than Adacel Tech. It trades about 0.05 of its potential returns per unit of risk. Adacel Tech is currently generating about -0.03 per unit of risk. If you would invest 207.00 in National Storage REIT on September 14, 2024 and sell it today you would earn a total of 29.00 from holding National Storage REIT or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Adacel Tech
Performance |
| Timeline |
| National Storage REIT |
| Adacel Tech |
National Storage and Adacel Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Adacel Tech
The main advantage of trading using opposite National Storage and Adacel Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Adacel Tech 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 Adacel Tech will offset losses from the drop in Adacel Tech's long position.| National Storage vs. Scentre Group | National Storage vs. Vicinity Centres Re | National Storage vs. Charter Hall Retail | National Storage vs. Cromwell Property Group |
| Adacel Tech vs. National Storage REIT | Adacel Tech vs. Charter Hall Retail | Adacel Tech vs. EROAD | Adacel Tech vs. Farm Pride Foods |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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