Correlation Between National Storage and Flagship Investments
Can any of the company-specific risk be diversified away by investing in both National Storage and Flagship Investments 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 Flagship Investments 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 Flagship Investments, you can compare the effects of market volatilities on National Storage and Flagship Investments 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 Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Flagship Investments.
Diversification Opportunities for National Storage and Flagship Investments
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Flagship is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Investments 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 Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of National Storage i.e., National Storage and Flagship Investments go up and down completely randomly.
Pair Corralation between National Storage and Flagship Investments
Assuming the 90 days trading horizon National Storage is expected to generate 1.45 times less return on investment than Flagship Investments. But when comparing it to its historical volatility, National Storage REIT is 1.57 times less risky than Flagship Investments. It trades about 0.1 of its potential returns per unit of risk. Flagship Investments is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 182.00 in Flagship Investments on September 1, 2024 and sell it today you would earn a total of 33.00 from holding Flagship Investments or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Flagship Investments
Performance |
| Timeline |
| National Storage REIT |
| Flagship Investments |
National Storage and Flagship Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Flagship Investments
The main advantage of trading using opposite National Storage and Flagship Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Flagship Investments 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 Flagship Investments will offset losses from the drop in Flagship Investments' long position.| National Storage vs. Truscott Mining Corp | National Storage vs. Iron Road | National Storage vs. The Environmental Group | National Storage vs. Bisalloy Steel Group |
| Flagship Investments vs. Global Health | Flagship Investments vs. Bailador Technology Invest | Flagship Investments vs. Event Hospitality and | Flagship Investments vs. EVE Health Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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