Correlation Between National Storage and EROAD

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

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

Diversification Opportunities for National Storage and EROAD

0.71

Correlation Coefficient

National Storage  EROAD

Poor diversification

The 3 months correlation between National and EROAD is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 REIT are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of National Storage i.e., National Storage and EROAD go up and down completely randomly.

Pair Corralation between National Storage and EROAD

Assuming the 90 days trading horizon National Storage REIT is expected to generate 0.46 times more return on investment than EROAD. However, National Storage REIT is 2.16 times less risky than EROAD. It trades about -0.13 of its potential returns per unit of risk. EROAD is currently generating about -0.14 per unit of risk. If you would invest  238.00  in National Storage REIT on December 24, 2024 and sell it today you would lose (21.00) from holding National Storage REIT or give up 8.82% of portfolio value over 90 days.

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

National Storage REIT  vs.  EROAD

National Storage REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Storage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EROAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days EROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Storage and EROAD

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

The idea behind National Storage REIT and EROAD 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.