Correlation Between National Storage and Queste Communications
Can any of the company-specific risk be diversified away by investing in both National Storage and Queste Communications 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 Queste Communications 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 Queste Communications, you can compare the effects of market volatilities on National Storage and Queste Communications 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 Queste Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Queste Communications.
Diversification Opportunities for National Storage and Queste Communications
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Queste is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Queste Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queste Communications 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 Queste Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queste Communications has no effect on the direction of National Storage i.e., National Storage and Queste Communications go up and down completely randomly.
Pair Corralation between National Storage and Queste Communications
Assuming the 90 days trading horizon National Storage is expected to generate 1.14 times less return on investment than Queste Communications. But when comparing it to its historical volatility, National Storage REIT is 2.35 times less risky than Queste Communications. It trades about 0.03 of its potential returns per unit of risk. Queste Communications is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4.40 in Queste Communications on October 20, 2024 and sell it today you would earn a total of 0.10 from holding Queste Communications or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Queste Communications
Performance |
| Timeline |
| National Storage REIT |
| Queste Communications |
National Storage and Queste Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Queste Communications
The main advantage of trading using opposite National Storage and Queste Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Queste Communications 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 Queste Communications will offset losses from the drop in Queste Communications' long position.| National Storage vs. Queste Communications | National Storage vs. Beston Global Food | National Storage vs. Autosports Group | National Storage vs. Oceania Healthcare |
| Queste Communications vs. Hammer Metals | Queste Communications vs. National Storage REIT | Queste Communications vs. ABACUS STORAGE KING | Queste Communications vs. Aurelia 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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