Correlation Between National Storage and EROAD
Can any of the company-specific risk be diversified away by investing in both National Storage and EROAD 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 EROAD 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 EROAD, you can compare the effects of market volatilities on National Storage and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and EROAD.
Diversification Opportunities for National Storage and EROAD
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and EROAD is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of National Storage i.e., National Storage and EROAD go up and down completely randomly.
Pair Corralation between National Storage and EROAD
Assuming the 90 days trading horizon National Storage is expected to generate 11.54 times less return on investment than EROAD. But when comparing it to its historical volatility, National Storage REIT is 4.24 times less risky than EROAD. It trades about 0.02 of its potential returns per unit of risk. EROAD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 44.00 in EROAD on August 29, 2024 and sell it today you would earn a total of 40.00 from holding EROAD or generate 90.91% 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. EROAD
Performance |
| Timeline |
| National Storage REIT |
| EROAD |
National Storage and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and EROAD
The main advantage of trading using opposite National Storage and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD'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 |
| EROAD vs. Navigator Global Investments | EROAD vs. Super Retail Group | EROAD vs. Regal Investment | EROAD 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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