Correlation Between Life Storage and Associated Capital

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Can any of the company-specific risk be diversified away by investing in both Life Storage and Associated Capital 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 Life Storage and Associated Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Storage and Associated Capital Group, you can compare the effects of market volatilities on Life Storage and Associated Capital 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 Life Storage with a short position of Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Storage and Associated Capital.

Diversification Opportunities for Life Storage and Associated Capital

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Life Storage and Associated is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Life Storage and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital and Life Storage 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 Life Storage are associated (or correlated) with Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Life Storage i.e., Life Storage and Associated Capital go up and down completely randomly.

Pair Corralation between Life Storage and Associated Capital

Considering the 90-day investment horizon Life Storage is expected to generate 0.67 times more return on investment than Associated Capital. However, Life Storage is 1.48 times less risky than Associated Capital. It trades about 0.1 of its potential returns per unit of risk. Associated Capital Group is currently generating about 0.02 per unit of risk. If you would invest  6,399  in Life Storage on May 13, 2022 and sell it today you would earn a total of  6,896  from holding Life Storage or generate 107.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Life Storage  vs.  Associated Capital Group

 Performance (%) 
       Timeline  
Life Storage 
Life Storage Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Life Storage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Life Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Life Storage Price Channel

Associated Capital 
Associated Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Associated Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Associated Price Channel

Life Storage and Associated Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Life Storage and Associated Capital

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

Associated Capital Group

Pair trading matchups for Associated Capital

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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