Correlation Between National Storage and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both National Storage and Ramsay Health 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 Ramsay Health 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 Ramsay Health Care, you can compare the effects of market volatilities on National Storage and Ramsay Health 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 Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Ramsay Health.
Diversification Opportunities for National Storage and Ramsay Health
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Ramsay is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care 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 Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of National Storage i.e., National Storage and Ramsay Health go up and down completely randomly.
Pair Corralation between National Storage and Ramsay Health
Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.77 times more return on investment than Ramsay Health. However, National Storage REIT is 1.3 times less risky than Ramsay Health. It trades about -0.01 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.08 per unit of risk. If you would invest 237.00 in National Storage REIT on December 4, 2024 and sell it today you would lose (19.00) from holding National Storage REIT or give up 8.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
National Storage REIT vs. Ramsay Health Care
Performance |
| Timeline |
| National Storage REIT |
| Ramsay Health Care |
National Storage and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Ramsay Health
The main advantage of trading using opposite National Storage and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Ramsay Health 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 Ramsay Health will offset losses from the drop in Ramsay Health's long position.| National Storage vs. Centaurus Metals | National Storage vs. AiMedia Technologies | National Storage vs. Sky Metals | National Storage vs. Mount Gibson Iron |
| Ramsay Health vs. oOhMedia | Ramsay Health vs. Infomedia | Ramsay Health vs. Sky Metals | Ramsay Health vs. Kneomedia |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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