Correlation Between Carindale Property and National Storage

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

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

Diversification Opportunities for Carindale Property and National Storage

0.46

Correlation Coefficient

Carindale Property  National Storage

Very weak diversification

The 3 months correlation between Carindale and National is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Carindale Property Trust and National Storage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage REIT and Carindale Property 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 Carindale Property 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 REIT has no effect on the direction of Carindale Property i.e., Carindale Property and National Storage go up and down completely randomly.

Pair Corralation between Carindale Property and National Storage

Assuming the 90 days trading horizon Carindale Property Trust is expected to under-perform the National Storage. In addition to that, Carindale Property is 1.34 times more volatile than National Storage REIT. It trades about -0.03 of its total potential returns per unit of risk. National Storage REIT is currently generating about 0.0 per unit of volatility. If you would invest  250.00  in National Storage REIT on September 5, 2024 and sell it today you would earn a total of  0.00  from holding National Storage REIT or generate 0.0% return on investment over 90 days.

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

Carindale Property Trust  vs.  National Storage REIT

Carindale Property Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carindale Property Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carindale Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

National Storage REIT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Storage REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Storage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carindale Property and National Storage

The main advantage of trading using opposite Carindale Property and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carindale Property 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 Carindale Property Trust and National Storage REIT 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.