Correlation Between Terreno Realty and CubeSmart
Can any of the company-specific risk be diversified away by investing in both Terreno Realty and CubeSmart 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 Terreno Realty and CubeSmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terreno Realty and CubeSmart, you can compare the effects of market volatilities on Terreno Realty and CubeSmart 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 Terreno Realty with a short position of CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terreno Realty and CubeSmart.
Diversification Opportunities for Terreno Realty and CubeSmart
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Terreno and CubeSmart is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Terreno Realty and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart and Terreno Realty 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 Terreno Realty are associated (or correlated) with CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Terreno Realty i.e., Terreno Realty and CubeSmart go up and down completely randomly.
Pair Corralation between Terreno Realty and CubeSmart
Given the investment horizon of 90 days Terreno Realty is expected to under-perform the CubeSmart. But the stock apears to be less risky and, when comparing its historical volatility, Terreno Realty is 1.45 times less risky than CubeSmart. The stock trades about -0.05 of its potential returns per unit of risk. The CubeSmart is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,801 in CubeSmart on August 27, 2024 and sell it today you would earn a total of 185.00 from holding CubeSmart or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terreno Realty vs. CubeSmart
Performance |
| Timeline |
| Terreno Realty |
| CubeSmart |
Terreno Realty and CubeSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terreno Realty and CubeSmart
The main advantage of trading using opposite Terreno Realty and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terreno Realty position performs unexpectedly, CubeSmart 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 CubeSmart will offset losses from the drop in CubeSmart's long position.| Terreno Realty vs. Plymouth Industrial REIT | Terreno Realty vs. EastGroup Properties | Terreno Realty vs. LXP Industrial Trust | Terreno Realty vs. First Industrial Realty |
| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space Storage |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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