Correlation Between CubeSmart and Montea Comm

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

By analyzing existing cross correlation between CubeSmart and Montea Comm VA, you can compare the effects of market volatilities on CubeSmart and Montea Comm 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 Montea Comm. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and Montea Comm.

Diversification Opportunities for CubeSmart and Montea Comm

0.13

Correlation Coefficient

CubeSmart  Montea Comm

Average diversification

The 3 months correlation between CubeSmart and Montea is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart and Montea Comm VA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montea Comm VA 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 Montea Comm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montea Comm VA has no effect on the direction of CubeSmart i.e., CubeSmart and Montea Comm go up and down completely randomly.

Pair Corralation between CubeSmart and Montea Comm

Assuming the 90 days horizon CubeSmart is expected to under-perform the Montea Comm. But the stock apears to be less risky and, when comparing its historical volatility, CubeSmart is 1.23 times less risky than Montea Comm. The stock trades about -0.07 of its potential returns per unit of risk. The Montea Comm VA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,210  in Montea Comm VA on December 21, 2024 and sell it today you would earn a total of  310.00  from holding Montea Comm VA or generate 4.99% return on investment over 90 days.

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

CubeSmart  vs.  Montea Comm VA

CubeSmart

Risk-Adjusted Performance

Very Weak

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

Montea Comm VA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Montea Comm VA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Montea Comm is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CubeSmart and Montea Comm

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

The idea behind CubeSmart and Montea Comm VA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.