Correlation Between National Storage and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both National Storage and Insignia Financial 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 Insignia Financial 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 Insignia Financial, you can compare the effects of market volatilities on National Storage and Insignia Financial 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 Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Insignia Financial.
Diversification Opportunities for National Storage and Insignia Financial
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Insignia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of National Storage i.e., National Storage and Insignia Financial go up and down completely randomly.
Pair Corralation between National Storage and Insignia Financial
Assuming the 90 days trading horizon National Storage is expected to generate 2.37 times less return on investment than Insignia Financial. But when comparing it to its historical volatility, National Storage REIT is 1.93 times less risky than Insignia Financial. It trades about 0.02 of its potential returns per unit of risk. Insignia Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 309.00 in Insignia Financial on September 15, 2024 and sell it today you would earn a total of 52.00 from holding Insignia Financial or generate 16.83% 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. Insignia Financial
Performance |
| Timeline |
| National Storage REIT |
| Insignia Financial |
National Storage and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Insignia Financial
The main advantage of trading using opposite National Storage and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial'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 |
| Insignia Financial vs. Black Rock Mining | Insignia Financial vs. REGAL ASIAN INVESTMENTS | Insignia Financial vs. National Storage REIT | Insignia Financial vs. Flagship Investments |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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