Correlation Between National Storage and Lendlease
Can any of the company-specific risk be diversified away by investing in both National Storage and Lendlease 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 Lendlease 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 Lendlease Group, you can compare the effects of market volatilities on National Storage and Lendlease 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 Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Lendlease.
Diversification Opportunities for National Storage and Lendlease
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Lendlease is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group 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 Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of National Storage i.e., National Storage and Lendlease go up and down completely randomly.
Pair Corralation between National Storage and Lendlease
Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.59 times more return on investment than Lendlease. However, National Storage REIT is 1.7 times less risky than Lendlease. It trades about 0.03 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.0 per unit of risk. If you would invest 220.00 in National Storage REIT on September 14, 2024 and sell it today you would earn a total of 16.00 from holding National Storage REIT or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Lendlease Group
Performance |
| Timeline |
| National Storage REIT |
| Lendlease Group |
National Storage and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Lendlease
The main advantage of trading using opposite National Storage and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease'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 |
| Lendlease vs. Pioneer Credit | Lendlease vs. BSP Financial Group | Lendlease vs. Data3 | Lendlease vs. Perpetual Credit Income |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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