Correlation Between Terreno Realty and CubeSmart

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

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

Diversification Opportunities for Terreno Realty and CubeSmart

0.77

Correlation Coefficient

Terreno Realty  CubeSmart

Poor diversification

The 3 months correlation between Terreno and CubeSmart is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Terreno Realty and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart and Terreno 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 Terreno Realty are associated (or correlated) with CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Terreno Realty i.e., Terreno Realty and CubeSmart go up and down completely randomly.

Pair Corralation between Terreno Realty and CubeSmart

Given the investment horizon of 90 days Terreno Realty is expected to generate 1.26 times more return on investment than CubeSmart. However, Terreno Realty is 1.26 times more volatile than CubeSmart. It trades about -0.07 of its potential returns per unit of risk. CubeSmart is currently generating about -0.16 per unit of risk. If you would invest  6,807  in Terreno Realty on September 12, 2024 and sell it today you would lose (493.00) from holding Terreno Realty or give up 7.24% of portfolio value over 90 days.

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

Terreno Realty  vs.  CubeSmart

Terreno Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terreno Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Terreno Realty and CubeSmart

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

The idea behind Terreno Realty and CubeSmart 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.