Correlation Between National Storage and Vulcan Steel
Can any of the company-specific risk be diversified away by investing in both National Storage and Vulcan Steel 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 Vulcan Steel 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 Vulcan Steel, you can compare the effects of market volatilities on National Storage and Vulcan Steel 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 Vulcan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Vulcan Steel.
Diversification Opportunities for National Storage and Vulcan Steel
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Vulcan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Vulcan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Steel 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 Vulcan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Steel has no effect on the direction of National Storage i.e., National Storage and Vulcan Steel go up and down completely randomly.
Pair Corralation between National Storage and Vulcan Steel
Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.55 times more return on investment than Vulcan Steel. However, National Storage REIT is 1.83 times less risky than Vulcan Steel. It trades about 0.03 of its potential returns per unit of risk. Vulcan Steel is currently generating about 0.01 per unit of risk. If you would invest 214.00 in National Storage REIT on August 30, 2024 and sell it today you would earn a total of 39.00 from holding National Storage REIT or generate 18.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage REIT vs. Vulcan Steel
Performance |
| Timeline |
| National Storage REIT |
| Vulcan Steel |
National Storage and Vulcan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Vulcan Steel
The main advantage of trading using opposite National Storage and Vulcan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Vulcan Steel 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 Vulcan Steel will offset losses from the drop in Vulcan Steel's long position.| National Storage vs. Australian Unity Office | National Storage vs. Champion Iron | National Storage vs. Ridley | National Storage vs. Peel Mining |
| Vulcan Steel vs. Super Retail Group | Vulcan Steel vs. Microequities Asset Management | Vulcan Steel vs. IDP Education | Vulcan Steel vs. National Storage REIT |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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