Correlation Between National Storage and Woolworths
Can any of the company-specific risk be diversified away by investing in both National Storage and Woolworths 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 Woolworths 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 Woolworths, you can compare the effects of market volatilities on National Storage and Woolworths 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 Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Woolworths.
Diversification Opportunities for National Storage and Woolworths
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Woolworths is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths 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 Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of National Storage i.e., National Storage and Woolworths go up and down completely randomly.
Pair Corralation between National Storage and Woolworths
Assuming the 90 days trading horizon National Storage REIT is expected to under-perform the Woolworths. In addition to that, National Storage is 1.36 times more volatile than Woolworths. It trades about -0.1 of its total potential returns per unit of risk. Woolworths is currently generating about -0.05 per unit of volatility. If you would invest 3,037 in Woolworths on October 23, 2024 and sell it today you would lose (18.00) from holding Woolworths or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
National Storage REIT vs. Woolworths
Performance |
| Timeline |
| National Storage REIT |
| Woolworths |
National Storage and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Woolworths
The main advantage of trading using opposite National Storage and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Woolworths 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 Woolworths will offset losses from the drop in Woolworths' 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 |
| Woolworths vs. Qbe Insurance Group | Woolworths vs. My Foodie Box | Woolworths vs. Super Retail Group | Woolworths vs. Commonwealth Bank of |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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