Correlation Between National Storage and Prime Financial

Can any of the company-specific risk be diversified away by investing in both National Storage and Prime Financial 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 Prime Financial 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 Prime Financial Group, you can compare the effects of market volatilities on National Storage and Prime Financial 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 Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Prime Financial.

Diversification Opportunities for National Storage and Prime Financial

-0.46

Correlation Coefficient

National Storage  Prime Financial

Very good diversification

The 3 months correlation between National and Prime is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group 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 Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of National Storage i.e., National Storage and Prime Financial go up and down completely randomly.

Pair Corralation between National Storage and Prime Financial

Assuming the 90 days trading horizon National Storage REIT is expected to under-perform the Prime Financial. But the stock apears to be less risky and, when comparing its historical volatility, National Storage REIT is 2.64 times less risky than Prime Financial. The stock trades about -0.11 of its potential returns per unit of risk. The Prime Financial Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Prime Financial Group on December 21, 2024 and sell it today you would earn a total of  1.00  from holding Prime Financial Group or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

National Storage REIT  vs.  Prime Financial Group

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.

Prime Financial Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Prime Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with National Storage and Prime Financial

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

The idea behind National Storage REIT and Prime Financial Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.