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

0.01

Correlation Coefficient

SmartStop Self  FP Newspapers

Significant diversification

The 3 months correlation between SmartStop and FPNUF is 0.01. 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 generate 148.89 times more return on investment than FP Newspapers. However, SmartStop Self is 148.89 times more volatile than FP Newspapers. It trades about 0.2 of its potential returns per unit of risk. FP Newspapers is currently generating about 0.04 per unit of risk. If you would invest  3,560  in SmartStop Self Storage on December 29, 2024 and sell it today you would lose (244.00) from holding SmartStop Self Storage or give up 6.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

SmartStop Self Storage  vs.  FP Newspapers

SmartStop Self Storage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, SmartStop Self reported solid returns over the last few months and may actually be approaching a breakup point.

FP Newspapers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FP Newspapers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FP Newspapers is not utilizing all of its potentials. The current 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.