Correlation Between Scentre and National Storage
Can any of the company-specific risk be diversified away by investing in both Scentre and National Storage 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 Scentre and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scentre Group and National Storage REIT, you can compare the effects of market volatilities on Scentre and National Storage 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 Scentre with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scentre and National Storage.
Diversification Opportunities for Scentre and National Storage
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scentre and National is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Scentre Group and National Storage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage REIT and Scentre 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 Scentre Group are associated (or correlated) with National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage REIT has no effect on the direction of Scentre i.e., Scentre and National Storage go up and down completely randomly.
Pair Corralation between Scentre and National Storage
Assuming the 90 days trading horizon Scentre Group is expected to generate 0.96 times more return on investment than National Storage. However, Scentre Group is 1.04 times less risky than National Storage. It trades about 0.16 of its potential returns per unit of risk. National Storage REIT is currently generating about 0.1 per unit of risk. If you would invest 353.00 in Scentre Group on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Scentre Group or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scentre Group vs. National Storage REIT
Performance |
| Timeline |
| Scentre Group |
| National Storage REIT |
Scentre and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scentre and National Storage
The main advantage of trading using opposite Scentre and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scentre position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage's long position.| Scentre vs. Mayfield Childcare | Scentre vs. Retail Food Group | Scentre vs. Autosports Group | Scentre vs. Patriot Battery Metals |
| National Storage vs. Scentre Group | National Storage vs. Vicinity Centres Re | National Storage vs. Charter Hall Retail | National Storage vs. Cromwell Property Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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