Correlation Between CubeSmart and VICI Properties

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

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

Diversification Opportunities for CubeSmart and VICI Properties

0.84

Correlation Coefficient

CubeSmart  VICI Properties

Very poor diversification

The 3 months correlation between CubeSmart and VICI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and VICI Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VICI 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 VICI Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VICI Properties has no effect on the direction of CubeSmart i.e., CubeSmart and VICI Properties go up and down completely randomly.

Pair Corralation between CubeSmart and VICI Properties

Given the investment horizon of 90 days CubeSmart is expected to under-perform the VICI Properties. In addition to that, CubeSmart is 1.06 times more volatile than VICI Properties. It trades about -0.14 of its total potential returns per unit of risk. VICI Properties is currently generating about 0.0 per unit of volatility. If you would invest  3,215  in VICI Properties on November 28, 2024 and sell it today you would lose (20.00) from holding VICI Properties or give up 0.62% of portfolio value over 90 days.

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

CubeSmart  vs.  VICI Properties

CubeSmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days CubeSmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

VICI Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days VICI Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, VICI Properties is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CubeSmart and VICI Properties

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

The idea behind CubeSmart and VICI 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.