Correlation Between National Storage and Charter Hall
Can any of the company-specific risk be diversified away by investing in both National Storage and Charter Hall 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 Charter Hall 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 Charter Hall Retail, you can compare the effects of market volatilities on National Storage and Charter Hall 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 Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Charter Hall.
Diversification Opportunities for National Storage and Charter Hall
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Charter is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Charter Hall Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Retail 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 Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Retail has no effect on the direction of National Storage i.e., National Storage and Charter Hall go up and down completely randomly.
Pair Corralation between National Storage and Charter Hall
Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.98 times more return on investment than Charter Hall. However, National Storage REIT is 1.02 times less risky than Charter Hall. It trades about 0.12 of its potential returns per unit of risk. Charter Hall Retail is currently generating about 0.02 per unit of risk. If you would invest 247.00 in National Storage REIT on August 29, 2024 and sell it today you would earn a total of 6.00 from holding National Storage REIT or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Charter Hall Retail
Performance |
| Timeline |
| National Storage REIT |
| Charter Hall Retail |
National Storage and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Charter Hall
The main advantage of trading using opposite National Storage and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Charter Hall 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 Charter Hall will offset losses from the drop in Charter Hall'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 |
| Charter Hall vs. Cromwell Property Group | Charter Hall vs. GDI Property Group | Charter Hall vs. Australian Unity Office |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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