Correlation Between National Storage and BNK Banking
Can any of the company-specific risk be diversified away by investing in both National Storage and BNK Banking 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 BNK Banking 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 BNK Banking, you can compare the effects of market volatilities on National Storage and BNK Banking 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 BNK Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and BNK Banking.
Diversification Opportunities for National Storage and BNK Banking
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and BNK is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Banking 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 BNK Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Banking has no effect on the direction of National Storage i.e., National Storage and BNK Banking go up and down completely randomly.
Pair Corralation between National Storage and BNK Banking
Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.36 times more return on investment than BNK Banking. However, National Storage REIT is 2.78 times less risky than BNK Banking. It trades about 0.02 of its potential returns per unit of risk. BNK Banking is currently generating about -0.01 per unit of risk. If you would invest 213.00 in National Storage REIT on October 23, 2024 and sell it today you would earn a total of 18.00 from holding National Storage REIT or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. BNK Banking
Performance |
| Timeline |
| National Storage REIT |
| BNK Banking |
National Storage and BNK Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and BNK Banking
The main advantage of trading using opposite National Storage and BNK Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, BNK Banking 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 BNK Banking will offset losses from the drop in BNK Banking'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 |
| BNK Banking vs. Energy Resources | BNK Banking vs. 88 Energy | BNK Banking vs. A1 Investments Resources | BNK Banking vs. Coronado Global Resources |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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