Correlation Between VARIOUS EATERIES and National Storage

Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES 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 VARIOUS EATERIES and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VARIOUS EATERIES LS and National Storage Affiliates, you can compare the effects of market volatilities on VARIOUS EATERIES 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 VARIOUS EATERIES with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and National Storage.

Diversification Opportunities for VARIOUS EATERIES and National Storage

0.87

Correlation Coefficient

VARIOUS EATERIES  National Storage

Very poor diversification

The 3 months correlation between VARIOUS and National is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS 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 VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and National Storage go up and down completely randomly.

Pair Corralation between VARIOUS EATERIES and National Storage

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to under-perform the National Storage. But the stock apears to be less risky and, when comparing its historical volatility, VARIOUS EATERIES LS is 1.11 times less risky than National Storage. The stock trades about -0.24 of its potential returns per unit of risk. The National Storage Affiliates is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  3,630  in National Storage Affiliates on October 26, 2024 and sell it today you would lose (183.00) from holding National Storage Affiliates or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

VARIOUS EATERIES LS  vs.  National Storage Affiliates

VARIOUS EATERIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VARIOUS EATERIES LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with VARIOUS EATERIES and National Storage

The main advantage of trading using opposite VARIOUS EATERIES and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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.

The idea behind VARIOUS EATERIES LS and National Storage Affiliates 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.