Correlation Between National Storage and Australia
Can any of the company-specific risk be diversified away by investing in both National Storage and Australia 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 Australia 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 Australia and New, you can compare the effects of market volatilities on National Storage and Australia 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 Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Australia.
Diversification Opportunities for National Storage and Australia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Australia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New 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 Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of National Storage i.e., National Storage and Australia go up and down completely randomly.
Pair Corralation between National Storage and Australia
Assuming the 90 days trading horizon National Storage REIT is expected to under-perform the Australia. In addition to that, National Storage is 1.01 times more volatile than Australia and New. It trades about -0.25 of its total potential returns per unit of risk. Australia and New is currently generating about 0.34 per unit of volatility. If you would invest 2,859 in Australia and New on November 2, 2024 and sell it today you would earn a total of 208.00 from holding Australia and New or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
National Storage REIT vs. Australia and New
Performance |
| Timeline |
| National Storage REIT |
| Australia and New |
National Storage and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Australia
The main advantage of trading using opposite National Storage and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Australia 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 Australia will offset losses from the drop in Australia's long position.| National Storage vs. BKI Investment | National Storage vs. Duxton Broadacre Farms | National Storage vs. Homeco Daily Needs | National Storage vs. Aussie Broadband |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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