Correlation Between National Storage and Collins Foods
Can any of the company-specific risk be diversified away by investing in both National Storage and Collins Foods 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 Collins Foods 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 Collins Foods, you can compare the effects of market volatilities on National Storage and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Collins Foods.
Diversification Opportunities for National Storage and Collins Foods
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Collins is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of National Storage i.e., National Storage and Collins Foods go up and down completely randomly.
Pair Corralation between National Storage and Collins Foods
Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.65 times more return on investment than Collins Foods. However, National Storage REIT is 1.53 times less risky than Collins Foods. It trades about 0.03 of its potential returns per unit of risk. Collins Foods is currently generating about 0.01 per unit of risk. If you would invest 209.00 in National Storage REIT on October 7, 2024 and sell it today you would earn a total of 28.00 from holding National Storage REIT or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Collins Foods
Performance |
| Timeline |
| National Storage REIT |
| Collins Foods |
National Storage and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Collins Foods
The main advantage of trading using opposite National Storage and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| National Storage vs. Step One Clothing | National Storage vs. Home Consortium | National Storage vs. Sports Entertainment Group | National Storage vs. Super Retail Group |
| Collins Foods vs. Aneka Tambang Tbk | Collins Foods vs. Commonwealth Bank | Collins Foods vs. BHP Group Limited | Collins Foods vs. Rio Tinto |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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