Correlation Between National Storage and Plymouth Industrial

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

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

Diversification Opportunities for National Storage and Plymouth Industrial

0.18

Correlation Coefficient

National Storage  Plymouth Industrial

Average diversification

The 3 months correlation between National and Plymouth is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Plymouth Industrial REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plymouth Industrial REIT and National Storage 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 National Storage Affiliates are associated (or correlated) with Plymouth Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plymouth Industrial REIT has no effect on the direction of National Storage i.e., National Storage and Plymouth Industrial go up and down completely randomly.

Pair Corralation between National Storage and Plymouth Industrial

Considering the 90-day investment horizon National Storage Affiliates is expected to generate 0.94 times more return on investment than Plymouth Industrial. However, National Storage Affiliates is 1.06 times less risky than Plymouth Industrial. It trades about 0.06 of its potential returns per unit of risk. Plymouth Industrial REIT is currently generating about -0.04 per unit of risk. If you would invest  3,678  in National Storage Affiliates on December 30, 2024 and sell it today you would earn a total of  193.00  from holding National Storage Affiliates or generate 5.25% return on investment over 90 days.

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

National Storage Affiliates  vs.  Plymouth Industrial REIT

National Storage Aff

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Storage Affiliates are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, National Storage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Plymouth Industrial REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plymouth Industrial REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Plymouth Industrial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with National Storage and Plymouth Industrial

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

The idea behind National Storage Affiliates and Plymouth Industrial 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.