Correlation Between Warehouses and National Storage
Can any of the company-specific risk be diversified away by investing in both Warehouses 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 Warehouses and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warehouses De Pauw and National Storage Affiliates, you can compare the effects of market volatilities on Warehouses 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 Warehouses with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warehouses and National Storage.
Diversification Opportunities for Warehouses and National Storage
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Warehouses and National is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses De Pauw and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff and Warehouses 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 Warehouses De Pauw 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 Aff has no effect on the direction of Warehouses i.e., Warehouses and National Storage go up and down completely randomly.
Pair Corralation between Warehouses and National Storage
Assuming the 90 days trading horizon Warehouses De Pauw is expected to under-perform the National Storage. In addition to that, Warehouses is 1.05 times more volatile than National Storage Affiliates. It trades about -0.09 of its total potential returns per unit of risk. National Storage Affiliates is currently generating about 0.06 per unit of volatility. If you would invest 3,977 in National Storage Affiliates on September 14, 2024 and sell it today you would earn a total of 59.00 from holding National Storage Affiliates or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warehouses De Pauw vs. National Storage Affiliates
Performance |
| Timeline |
| Warehouses De Pauw |
| National Storage Aff |
Warehouses and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warehouses and National Storage
The main advantage of trading using opposite Warehouses and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warehouses 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.| Warehouses vs. Extra Space Storage | Warehouses vs. REXFORD INDREALTY DL 01 | Warehouses vs. CubeSmart | Warehouses vs. First Industrial Realty |
| National Storage vs. Lifeway Foods | National Storage vs. TYSON FOODS A | National Storage vs. SENECA FOODS A | National Storage vs. MCEWEN MINING INC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |