Correlation Between National Storage and Andean Silver
Can any of the company-specific risk be diversified away by investing in both National Storage and Andean Silver 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 Andean Silver 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 Andean Silver Limited, you can compare the effects of market volatilities on National Storage and Andean Silver 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 Andean Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Andean Silver.
Diversification Opportunities for National Storage and Andean Silver
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Andean is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Andean Silver Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver Limited 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 Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver Limited has no effect on the direction of National Storage i.e., National Storage and Andean Silver go up and down completely randomly.
Pair Corralation between National Storage and Andean Silver
Assuming the 90 days trading horizon National Storage REIT is expected to under-perform the Andean Silver. But the stock apears to be less risky and, when comparing its historical volatility, National Storage REIT is 4.48 times less risky than Andean Silver. The stock trades about -0.03 of its potential returns per unit of risk. The Andean Silver Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Andean Silver Limited on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Andean Silver Limited or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
National Storage REIT vs. Andean Silver Limited
Performance |
| Timeline |
| National Storage REIT |
| Andean Silver Limited |
National Storage and Andean Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Andean Silver
The main advantage of trading using opposite National Storage and Andean Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Andean Silver 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 Andean Silver will offset losses from the drop in Andean Silver's long position.| National Storage vs. Charter Hall Retail | National Storage vs. GDI Property Group | National Storage vs. Australian Unity Office | National Storage vs. Ecofibre |
| Andean Silver vs. Northern Star Resources | Andean Silver vs. Evolution Mining | Andean Silver vs. Bluescope Steel | Andean Silver vs. Sandfire Resources NL |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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