Correlation Between National Storage and Balchem
Can any of the company-specific risk be diversified away by investing in both National Storage and Balchem 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 Balchem 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 Balchem, you can compare the effects of market volatilities on National Storage and Balchem 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 Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Balchem.
Diversification Opportunities for National Storage and Balchem
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Balchem is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of National Storage i.e., National Storage and Balchem go up and down completely randomly.
Pair Corralation between National Storage and Balchem
Assuming the 90 days horizon National Storage REIT is expected to generate 2.64 times more return on investment than Balchem. However, National Storage is 2.64 times more volatile than Balchem. It trades about 0.02 of its potential returns per unit of risk. Balchem is currently generating about 0.03 per unit of risk. If you would invest 140.00 in National Storage REIT on October 12, 2024 and sell it today you would earn a total of 5.00 from holding National Storage REIT or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.58% |
| Values | Daily Returns |
National Storage REIT vs. Balchem
Performance |
| Timeline |
| National Storage REIT |
| Balchem |
National Storage and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Balchem
The main advantage of trading using opposite National Storage and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| National Storage vs. Bright Scholar Education | National Storage vs. Vasta Platform | National Storage vs. California Engels Mining | National Storage vs. Perseus Mining Limited |
| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
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 Stocks Directory module to find actively traded stocks across global markets.
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