Correlation Between Vornado Realty and National Storage

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

By analyzing existing cross correlation between Vornado Realty Trust and National Storage Affiliates, you can compare the effects of market volatilities on Vornado Realty and National Storage 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 Vornado Realty with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vornado Realty and National Storage.

Diversification Opportunities for Vornado Realty and National Storage

0.26

Correlation Coefficient

Vornado Realty  National Storage

Modest diversification

The 3 months correlation between Vornado and National is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff and Vornado Realty 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 Vornado Realty Trust are associated (or correlated) with National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of Vornado Realty i.e., Vornado Realty and National Storage go up and down completely randomly.

Pair Corralation between Vornado Realty and National Storage

Assuming the 90 days trading horizon Vornado Realty is expected to generate 6.1 times less return on investment than National Storage. In addition to that, Vornado Realty is 1.28 times more volatile than National Storage Affiliates. It trades about 0.02 of its total potential returns per unit of risk. National Storage Affiliates is currently generating about 0.13 per unit of volatility. If you would invest  2,098  in National Storage Affiliates on December 31, 2024 and sell it today you would earn a total of  139.00  from holding National Storage Affiliates or generate 6.63% return on investment over 90 days.

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

Vornado Realty Trust  vs.  National Storage Affiliates

Vornado Realty Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vornado Realty Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Vornado Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

National Storage Aff

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Storage Affiliates are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, National Storage may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Vornado Realty and National Storage

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

The idea behind Vornado Realty Trust and National Storage Affiliates 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.