Correlation Between CubeSmart and REXFORD INDREALTY

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

By analyzing existing cross correlation between CubeSmart and REXFORD INDREALTY DL 01, you can compare the effects of market volatilities on CubeSmart and REXFORD INDREALTY 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 CubeSmart with a short position of REXFORD INDREALTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and REXFORD INDREALTY.

Diversification Opportunities for CubeSmart and REXFORD INDREALTY

0.73

Correlation Coefficient

CubeSmart  REXFORD INDREALTY

Poor diversification

The 3 months correlation between CubeSmart and REXFORD is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and REXFORD INDREALTY DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REXFORD INDREALTY and CubeSmart 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 CubeSmart are associated (or correlated) with REXFORD INDREALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REXFORD INDREALTY has no effect on the direction of CubeSmart i.e., CubeSmart and REXFORD INDREALTY go up and down completely randomly.

Pair Corralation between CubeSmart and REXFORD INDREALTY

Assuming the 90 days horizon CubeSmart is expected to under-perform the REXFORD INDREALTY. But the stock apears to be less risky and, when comparing its historical volatility, CubeSmart is 1.3 times less risky than REXFORD INDREALTY. The stock trades about -0.56 of its potential returns per unit of risk. The REXFORD INDREALTY DL 01 is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  3,960  in REXFORD INDREALTY DL 01 on September 28, 2024 and sell it today you would lose (280.00) from holding REXFORD INDREALTY DL 01 or give up 7.07% of portfolio value over 90 days.

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

CubeSmart  vs.  REXFORD INDREALTY DL 01

CubeSmart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CubeSmart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

REXFORD INDREALTY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REXFORD INDREALTY DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CubeSmart and REXFORD INDREALTY

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

The idea behind CubeSmart and REXFORD INDREALTY DL 01 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.