Correlation Between National Storage and BKI Investment
Can any of the company-specific risk be diversified away by investing in both National Storage and BKI Investment 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 BKI Investment 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 BKI Investment, you can compare the effects of market volatilities on National Storage and BKI Investment 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and BKI Investment.
Diversification Opportunities for National Storage and BKI Investment
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and BKI is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of National Storage i.e., National Storage and BKI Investment go up and down completely randomly.
Pair Corralation between National Storage and BKI Investment
Assuming the 90 days trading horizon National Storage REIT is expected to generate 1.59 times more return on investment than BKI Investment. However, National Storage is 1.59 times more volatile than BKI Investment. It trades about -0.01 of its potential returns per unit of risk. BKI Investment is currently generating about -0.09 per unit of risk. If you would invest 255.00 in National Storage REIT on August 30, 2024 and sell it today you would lose (2.00) from holding National Storage REIT or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. BKI Investment
Performance |
| Timeline |
| National Storage REIT |
| BKI Investment |
National Storage and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and BKI Investment
The main advantage of trading using opposite National Storage and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| National Storage vs. Australian Unity Office | National Storage vs. Champion Iron | National Storage vs. Ridley | National Storage vs. Peel Mining |
| BKI Investment vs. GQG Partners DRC | BKI Investment vs. MFF Capital Investments | BKI Investment vs. Metrics Master Income | BKI Investment vs. Australian United Investment |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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