Correlation Between CubeSmart and Gaming Leisure

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

By analyzing existing cross correlation between CubeSmart and Gaming Leisure Properties, you can compare the effects of market volatilities on CubeSmart and Gaming Leisure 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 CubeSmart with a short position of Gaming Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and Gaming Leisure.

Diversification Opportunities for CubeSmart and Gaming Leisure

0.38

Correlation Coefficient

CubeSmart  Gaming Leisure

Weak diversification

The 3 months correlation between CubeSmart and Gaming is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and Gaming Leisure Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Leisure Properties and CubeSmart 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 CubeSmart are associated (or correlated) with Gaming Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Leisure Properties has no effect on the direction of CubeSmart i.e., CubeSmart and Gaming Leisure go up and down completely randomly.

Pair Corralation between CubeSmart and Gaming Leisure

Given the investment horizon of 90 days CubeSmart is expected to generate 6.73 times less return on investment than Gaming Leisure. In addition to that, CubeSmart is 1.17 times more volatile than Gaming Leisure Properties. It trades about 0.01 of its total potential returns per unit of risk. Gaming Leisure Properties is currently generating about 0.1 per unit of volatility. If you would invest  4,700  in Gaming Leisure Properties on December 30, 2024 and sell it today you would earn a total of  340.00  from holding Gaming Leisure Properties or generate 7.23% return on investment over 90 days.

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

CubeSmart  vs.  Gaming Leisure Properties

CubeSmart

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CubeSmart are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, CubeSmart is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Gaming Leisure Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Leisure Properties are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Gaming Leisure may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CubeSmart and Gaming Leisure

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

The idea behind CubeSmart and Gaming Leisure Properties 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.