Correlation Between CubeSmart and REXFORD INDREALTY
Can any of the company-specific risk be diversified away by investing in both CubeSmart and REXFORD INDREALTY 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 CubeSmart and REXFORD INDREALTY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubeSmart and REXFORD INDREALTY DL 01, you can compare the effects of market volatilities on CubeSmart and REXFORD INDREALTY 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 CubeSmart with a short position of REXFORD INDREALTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and REXFORD INDREALTY.
Diversification Opportunities for CubeSmart and REXFORD INDREALTY
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CubeSmart and REXFORD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and REXFORD INDREALTY DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REXFORD INDREALTY and CubeSmart 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 CubeSmart are associated (or correlated) with REXFORD INDREALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REXFORD INDREALTY has no effect on the direction of CubeSmart i.e., CubeSmart and REXFORD INDREALTY go up and down completely randomly.
Pair Corralation between CubeSmart and REXFORD INDREALTY
Assuming the 90 days horizon CubeSmart is expected to generate 0.9 times more return on investment than REXFORD INDREALTY. However, CubeSmart is 1.11 times less risky than REXFORD INDREALTY. It trades about 0.08 of its potential returns per unit of risk. REXFORD INDREALTY DL 01 is currently generating about -0.01 per unit of risk. If you would invest 3,414 in CubeSmart on September 14, 2024 and sell it today you would earn a total of 1,024 from holding CubeSmart or generate 29.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
CubeSmart vs. REXFORD INDREALTY DL 01
Performance |
| Timeline |
| CubeSmart |
| REXFORD INDREALTY |
CubeSmart and REXFORD INDREALTY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubeSmart and REXFORD INDREALTY
The main advantage of trading using opposite CubeSmart and REXFORD INDREALTY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubeSmart position performs unexpectedly, REXFORD INDREALTY 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 REXFORD INDREALTY will offset losses from the drop in REXFORD INDREALTY's long position.| CubeSmart vs. Extra Space Storage | CubeSmart vs. REXFORD INDREALTY DL 01 | CubeSmart vs. First Industrial Realty | CubeSmart vs. Warehouses De Pauw |
| REXFORD INDREALTY vs. Extra Space Storage | REXFORD INDREALTY vs. CubeSmart | REXFORD INDREALTY vs. First Industrial Realty | REXFORD INDREALTY vs. Warehouses De Pauw |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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