Correlation Between SmartStop Self and FP Newspapers

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

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

Diversification Opportunities for SmartStop Self and FP Newspapers

-0.16

Correlation Coefficient

SmartStop Self  FP Newspapers

Good diversification

The 3 months correlation between SmartStop and FPNUF is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SmartStop Self Storage and FP Newspapers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FP Newspapers and SmartStop Self 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 SmartStop Self Storage are associated (or correlated) with FP Newspapers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FP Newspapers has no effect on the direction of SmartStop Self i.e., SmartStop Self and FP Newspapers go up and down completely randomly.

Pair Corralation between SmartStop Self and FP Newspapers

Assuming the 90 days horizon SmartStop Self Storage is expected to under-perform the FP Newspapers. In addition to that, SmartStop Self is 1.65 times more volatile than FP Newspapers. It trades about -0.01 of its total potential returns per unit of risk. FP Newspapers is currently generating about 0.01 per unit of volatility. If you would invest  38.00  in FP Newspapers on December 5, 2024 and sell it today you would earn a total of  0.00  from holding FP Newspapers or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

SmartStop Self Storage  vs.  FP Newspapers

SmartStop Self Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days SmartStop Self Storage has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

FP Newspapers

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SmartStop Self and FP Newspapers

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

The idea behind SmartStop Self Storage and FP Newspapers 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..