Correlation Between Ecofibre and National Storage
Can any of the company-specific risk be diversified away by investing in both Ecofibre 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 Ecofibre and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and National Storage REIT, you can compare the effects of market volatilities on Ecofibre 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 Ecofibre with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and National Storage.
Diversification Opportunities for Ecofibre and National Storage
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecofibre and National is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre 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 Ecofibre 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 Ecofibre 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 Ecofibre i.e., Ecofibre and National Storage go up and down completely randomly.
Pair Corralation between Ecofibre and National Storage
Assuming the 90 days trading horizon Ecofibre is expected to generate 6.74 times more return on investment than National Storage. However, Ecofibre is 6.74 times more volatile than National Storage REIT. It trades about 0.0 of its potential returns per unit of risk. National Storage REIT is currently generating about -0.02 per unit of risk. If you would invest 3.40 in Ecofibre on October 7, 2024 and sell it today you would lose (0.40) from holding Ecofibre or give up 11.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ecofibre vs. National Storage REIT
Performance |
Timeline |
Ecofibre |
National Storage REIT |
Ecofibre and National Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ecofibre and National Storage
The main advantage of trading using opposite Ecofibre and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre 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.Ecofibre vs. Group 6 Metals | Ecofibre vs. Stelar Metals | Ecofibre vs. Carnegie Clean Energy | Ecofibre vs. Black Rock Mining |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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