Correlation Between MicroSectors FANG and National Storage
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG 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 MicroSectors FANG and National Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and National Storage Affiliates, you can compare the effects of market volatilities on MicroSectors FANG 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 MicroSectors FANG with a short position of National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and National Storage.
Diversification Opportunities for MicroSectors FANG and National Storage
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectors and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index 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 MicroSectors FANG 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 MicroSectors FANG Index 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 MicroSectors FANG i.e., MicroSectors FANG and National Storage go up and down completely randomly.
Pair Corralation between MicroSectors FANG and National Storage
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 1.33 times more return on investment than National Storage. However, MicroSectors FANG is 1.33 times more volatile than National Storage Affiliates. It trades about 0.0 of its potential returns per unit of risk. National Storage Affiliates is currently generating about 0.0 per unit of risk. If you would invest 31,400 in MicroSectors FANG Index on January 16, 2024 and sell it today you would lose (360.00) from holding MicroSectors FANG Index or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
MicroSectors FANG Index vs. National Storage Affiliates
Performance |
| Timeline |
| MicroSectors FANG Index |
| National Storage Aff |
MicroSectors FANG and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and National Storage
The main advantage of trading using opposite MicroSectors FANG and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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.| MicroSectors FANG vs. HUMANA INC | MicroSectors FANG vs. Morningstar Unconstrained Allocation | MicroSectors FANG vs. Thrivent High Yield | MicroSectors FANG vs. High Yield Municipal Fund |
| National Storage vs. Extra Space Storage | National Storage vs. Americold Realty Trust | National Storage vs. Public Storage | National Storage vs. Terreno Realty |
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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