Correlation Between LIFE STORAGE and GARDNER DENVER

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Can any of the company-specific risk be diversified away by investing in both LIFE STORAGE and GARDNER DENVER 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 GARDNER DENVER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE STORAGE INC and GARDNER DENVER INC, you can compare the effects of market volatilities on LIFE STORAGE and GARDNER DENVER 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 GARDNER DENVER. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE STORAGE and GARDNER DENVER.

Diversification Opportunities for LIFE STORAGE and GARDNER DENVER

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between LIFE STORAGE and GARDNER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LIFE STORAGE INC and GARDNER DENVER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GARDNER DENVER INC 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 INC are associated (or correlated) with GARDNER DENVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GARDNER DENVER INC has no effect on the direction of LIFE STORAGE i.e., LIFE STORAGE and GARDNER DENVER go up and down completely randomly.

Pair Corralation between LIFE STORAGE and GARDNER DENVER

If you would invest (100.00)  in GARDNER DENVER INC on April 3, 2022 and sell it today you would earn a total of  100.00  from holding GARDNER DENVER INC or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LIFE STORAGE INC  vs.  GARDNER DENVER INC

 Performance (%) 
      Timeline 
LIFE STORAGE INC 
LIFE STORAGE Performance
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Over the last 90 days LIFE STORAGE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, LIFE STORAGE is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.
GARDNER DENVER INC 
GARDNER Performance
0 of 100
Over the last 90 days GARDNER DENVER INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, GARDNER DENVER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LIFE STORAGE and GARDNER DENVER Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with LIFE STORAGE and GARDNER DENVER

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

GARDNER DENVER INC

Pair trading matchups for GARDNER DENVER

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against GARDNER DENVER as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. GARDNER DENVER's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, GARDNER DENVER's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to GARDNER DENVER INC.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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