Correlation Between National Storage and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both National Storage and Centaurus Metals 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 Centaurus Metals 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 Centaurus Metals, you can compare the effects of market volatilities on National Storage and Centaurus Metals 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 Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Centaurus Metals.
Diversification Opportunities for National Storage and Centaurus Metals
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Centaurus is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals 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 Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of National Storage i.e., National Storage and Centaurus Metals go up and down completely randomly.
Pair Corralation between National Storage and Centaurus Metals
Assuming the 90 days trading horizon National Storage is expected to generate 15.76 times less return on investment than Centaurus Metals. But when comparing it to its historical volatility, National Storage REIT is 4.85 times less risky than Centaurus Metals. It trades about 0.01 of its potential returns per unit of risk. Centaurus Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Centaurus Metals on November 3, 2024 and sell it today you would earn a total of 9.00 from holding Centaurus Metals or generate 29.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Centaurus Metals
Performance |
| Timeline |
| National Storage REIT |
| Centaurus Metals |
National Storage and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Centaurus Metals
The main advantage of trading using opposite National Storage and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Centaurus Metals 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 Centaurus Metals will offset losses from the drop in Centaurus Metals' long position.| National Storage vs. Charter Hall Retail | National Storage vs. Cromwell Property Group | National Storage vs. Australian Unity Office | National Storage vs. Ecofibre |
| Centaurus Metals vs. Genetic Technologies | Centaurus Metals vs. Macquarie Technology Group | Centaurus Metals vs. Readytech Holdings | Centaurus Metals vs. Ainsworth Game Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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