Correlation Between WiseTech Global and National Storage
Can any of the company-specific risk be diversified away by investing in both WiseTech Global 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 WiseTech Global and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseTech Global Limited and National Storage REIT, you can compare the effects of market volatilities on WiseTech Global 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 WiseTech Global with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and National Storage.
Diversification Opportunities for WiseTech Global and National Storage
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WiseTech and National is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited 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 WiseTech Global 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 WiseTech Global Limited 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 WiseTech Global i.e., WiseTech Global and National Storage go up and down completely randomly.
Pair Corralation between WiseTech Global and National Storage
Assuming the 90 days trading horizon WiseTech Global Limited is expected to under-perform the National Storage. In addition to that, WiseTech Global is 4.11 times more volatile than National Storage REIT. It trades about -0.18 of its total potential returns per unit of risk. National Storage REIT is currently generating about -0.05 per unit of volatility. If you would invest 223.00 in National Storage REIT on November 28, 2024 and sell it today you would lose (3.00) from holding National Storage REIT or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. National Storage REIT
Performance |
| Timeline |
| WiseTech Global |
| National Storage REIT |
WiseTech Global and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and National Storage
The main advantage of trading using opposite WiseTech Global and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global 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.| WiseTech Global vs. BKI Investment | WiseTech Global vs. Catalyst Metals | WiseTech Global vs. Platinum Asia Investments | WiseTech Global vs. Polymetals Resources |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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