Correlation Between National Storage and Grupo Aeroportuario

Can any of the company-specific risk be diversified away by investing in both National Storage and Grupo Aeroportuario 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 Grupo Aeroportuario 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 Grupo Aeroportuario del, you can compare the effects of market volatilities on National Storage and Grupo Aeroportuario 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 Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Grupo Aeroportuario.

Diversification Opportunities for National Storage and Grupo Aeroportuario

0.15

Correlation Coefficient

National Storage  Grupo Aeroportuario

Average diversification

The 3 months correlation between National and Grupo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of National Storage i.e., National Storage and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between National Storage and Grupo Aeroportuario

Assuming the 90 days horizon National Storage Affiliates is expected to under-perform the Grupo Aeroportuario. But the stock apears to be less risky and, when comparing its historical volatility, National Storage Affiliates is 5.42 times less risky than Grupo Aeroportuario. The stock trades about -0.06 of its potential returns per unit of risk. The Grupo Aeroportuario del is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  953.00  in Grupo Aeroportuario del on September 15, 2024 and sell it today you would earn a total of  827.00  from holding Grupo Aeroportuario del or generate 86.78% 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.  Grupo Aeroportuario del

National Storage Aff

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Storage Affiliates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, National Storage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Grupo Aeroportuario del

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Aeroportuario reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Storage and Grupo Aeroportuario

The main advantage of trading using opposite National Storage and Grupo Aeroportuario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Grupo Aeroportuario 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 Grupo Aeroportuario will offset losses from the drop in Grupo Aeroportuario's long position.

The idea behind National Storage Affiliates and Grupo Aeroportuario del pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.