Correlation Between Nasdaq and SmartStop Self

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

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

Diversification Opportunities for Nasdaq and SmartStop Self

0.69

Correlation Coefficient

Nasdaq  SmartStop Self

Poor diversification

The 3 months correlation between Nasdaq and SmartStop is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and SmartStop Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartStop Self Storage and Nasdaq 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 Nasdaq Inc are associated (or correlated) with SmartStop Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartStop Self Storage has no effect on the direction of Nasdaq i.e., Nasdaq and SmartStop Self go up and down completely randomly.

Pair Corralation between Nasdaq and SmartStop Self

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the SmartStop Self. In addition to that, Nasdaq is 2.77 times more volatile than SmartStop Self Storage. It trades about -0.2 of its total potential returns per unit of risk. SmartStop Self Storage is currently generating about 0.22 per unit of volatility. If you would invest  885.00  in SmartStop Self Storage on October 10, 2024 and sell it today you would earn a total of  15.00  from holding SmartStop Self Storage or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  SmartStop Self Storage

Nasdaq Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SmartStop Self Storage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, SmartStop Self is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and SmartStop Self

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

The idea behind Nasdaq Inc and SmartStop Self Storage 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.