Correlation Between Warehouses and CubeSmart
Can any of the company-specific risk be diversified away by investing in both Warehouses 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 Warehouses and CubeSmart 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 CubeSmart, you can compare the effects of market volatilities on Warehouses 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 Warehouses with a short position of CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warehouses and CubeSmart.
Diversification Opportunities for Warehouses and CubeSmart
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Warehouses and CubeSmart is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses De Pauw and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart 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 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 Warehouses i.e., Warehouses and CubeSmart go up and down completely randomly.
Pair Corralation between Warehouses and CubeSmart
Assuming the 90 days trading horizon Warehouses De Pauw is expected to under-perform the CubeSmart. But the stock apears to be less risky and, when comparing its historical volatility, Warehouses De Pauw is 1.04 times less risky than CubeSmart. The stock trades about -0.02 of its potential returns per unit of risk. The CubeSmart is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,482 in CubeSmart on September 15, 2024 and sell it today you would earn a total of 956.00 from holding CubeSmart or generate 27.46% 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. CubeSmart
Performance |
| Timeline |
| Warehouses De Pauw |
| CubeSmart |
Warehouses and CubeSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warehouses and CubeSmart
The main advantage of trading using opposite Warehouses and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warehouses 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.| Warehouses vs. Extra Space Storage | Warehouses vs. REXFORD INDREALTY DL 01 | Warehouses vs. CubeSmart | Warehouses vs. First Industrial Realty |
| CubeSmart vs. Extra Space Storage | CubeSmart vs. REXFORD INDREALTY DL 01 | CubeSmart vs. First Industrial Realty | CubeSmart 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 Positions Ratings module to 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.
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