Correlation Between National Storage and Focus Home
Can any of the company-specific risk be diversified away by investing in both National Storage and Focus Home 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 National Storage and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage Affiliates and Focus Home Interactive, you can compare the effects of market volatilities on National Storage and Focus Home 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 National Storage with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Focus Home.
Diversification Opportunities for National Storage and Focus Home
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Focus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive and National Storage 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 National Storage Affiliates are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of National Storage i.e., National Storage and Focus Home go up and down completely randomly.
Pair Corralation between National Storage and Focus Home
Assuming the 90 days horizon National Storage Affiliates is expected to generate 0.41 times more return on investment than Focus Home. However, National Storage Affiliates is 2.45 times less risky than Focus Home. It trades about 0.03 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.02 per unit of risk. If you would invest 2,984 in National Storage Affiliates on September 23, 2024 and sell it today you would earn a total of 734.00 from holding National Storage Affiliates or generate 24.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
National Storage Affiliates vs. Focus Home Interactive
Performance |
Timeline |
National Storage Aff |
Focus Home Interactive |
National Storage and Focus Home Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Storage and Focus Home
The main advantage of trading using opposite National Storage and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.National Storage vs. Extra Space Storage | National Storage vs. REXFORD INDREALTY DL 01 | National Storage vs. CubeSmart | National Storage vs. First Industrial Realty |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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