Correlation Between Champion Iron and National Storage

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

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

Diversification Opportunities for Champion Iron and National Storage

0.2

Correlation Coefficient

Champion Iron  National Storage

Modest diversification

The 3 months correlation between Champion and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron 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 Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and National Storage go up and down completely randomly.

Pair Corralation between Champion Iron and National Storage

Assuming the 90 days trading horizon Champion Iron is expected to generate 1.93 times more return on investment than National Storage. However, Champion Iron is 1.93 times more volatile than National Storage REIT. It trades about -0.01 of its potential returns per unit of risk. National Storage REIT is currently generating about -0.1 per unit of risk. If you would invest  597.00  in Champion Iron on October 5, 2024 and sell it today you would lose (5.00) from holding Champion Iron or give up 0.84% of portfolio value over 90 days.

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

Champion Iron  vs.  National Storage REIT

Champion Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Iron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

National Storage REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Storage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Storage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Champion Iron and National Storage

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

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.