Correlation Between National Storage and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both National Storage and Falcon 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 Falcon 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 Falcon Metals, you can compare the effects of market volatilities on National Storage and Falcon 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Falcon Metals.
Diversification Opportunities for National Storage and Falcon Metals
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Falcon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of National Storage i.e., National Storage and Falcon Metals go up and down completely randomly.
Pair Corralation between National Storage and Falcon Metals
Assuming the 90 days trading horizon National Storage is expected to generate 5.31 times less return on investment than Falcon Metals. But when comparing it to its historical volatility, National Storage REIT is 5.88 times less risky than Falcon Metals. It trades about 0.02 of its potential returns per unit of risk. Falcon Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Falcon Metals on September 14, 2024 and sell it today you would lose (11.00) from holding Falcon Metals or give up 44.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Falcon Metals
Performance |
| Timeline |
| National Storage REIT |
| Falcon Metals |
National Storage and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Falcon Metals
The main advantage of trading using opposite National Storage and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Falcon 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 Falcon Metals will offset losses from the drop in Falcon Metals' 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 |
| Falcon Metals vs. National Storage REIT | Falcon Metals vs. Truscott Mining Corp | Falcon Metals vs. Argo Investments | Falcon Metals vs. Dalaroo Metals |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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