Correlation Between National Storage and SmartStop Self

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

Diversification Opportunities for National Storage and SmartStop Self

-0.39

Correlation Coefficient

National Storage  SmartStop Self

Very good diversification

The 3 months correlation between National and SmartStop is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT 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 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 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 National Storage i.e., National Storage and SmartStop Self go up and down completely randomly.

Pair Corralation between National Storage and SmartStop Self

Assuming the 90 days horizon National Storage is expected to generate 2.46 times less return on investment than SmartStop Self. In addition to that, National Storage is 2.4 times more volatile than SmartStop Self Storage. It trades about 0.04 of its total potential returns per unit of risk. SmartStop Self Storage is currently generating about 0.24 per unit of volatility. If you would invest  880.00  in SmartStop Self Storage on October 26, 2024 and sell it today you would earn a total of  155.00  from holding SmartStop Self Storage or generate 17.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.7%
Values	Daily Returns

National Storage REIT  vs.  SmartStop Self Storage

National Storage REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Storage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, National Storage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

SmartStop Self Storage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SmartStop Self reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Storage and SmartStop Self

The main advantage of trading using opposite National Storage and SmartStop Self positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage 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 National Storage REIT 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.