Correlation Between Ramsay Health and National Storage
Can any of the company-specific risk be diversified away by investing in both Ramsay Health 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 Ramsay Health and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ramsay Health Care and National Storage REIT, you can compare the effects of market volatilities on Ramsay Health 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 Ramsay Health with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and National Storage.
Diversification Opportunities for Ramsay Health and National Storage
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ramsay and National is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care 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 Ramsay Health 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 Ramsay Health Care 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 Ramsay Health i.e., Ramsay Health and National Storage go up and down completely randomly.
Pair Corralation between Ramsay Health and National Storage
Assuming the 90 days trading horizon Ramsay Health Care is expected to under-perform the National Storage. In addition to that, Ramsay Health is 1.32 times more volatile than National Storage REIT. It trades about -0.1 of its total potential returns per unit of risk. National Storage REIT is currently generating about -0.03 per unit of volatility. If you would invest 243.00 in National Storage REIT on September 15, 2024 and sell it today you would lose (6.00) from holding National Storage REIT or give up 2.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ramsay Health Care vs. National Storage REIT
Performance |
Timeline |
Ramsay Health Care |
National Storage REIT |
Ramsay Health and National Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ramsay Health and National Storage
The main advantage of trading using opposite Ramsay Health and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health 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.Ramsay Health vs. Land Homes Group | Ramsay Health vs. Green Technology Metals | Ramsay Health vs. Carnegie Clean Energy | Ramsay Health vs. Cleanaway Waste Management |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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