Correlation Between Life Storage and STAG Industrial

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

By analyzing existing cross correlation between Life Storage and STAG Industrial, you can compare the effects of market volatilities on Life Storage and STAG Industrial 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 STAG Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Storage and STAG Industrial.

Diversification Opportunities for Life Storage and STAG Industrial

0.0

Correlation Coefficient

Life Storage  STAG Industrial

Pay attention - limited upside

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

Pair Corralation between Life Storage and STAG Industrial

If you would invest  3,346  in STAG Industrial on February 3, 2025 and sell it today you would earn a total of  41.00  from holding STAG Industrial or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Life Storage  vs.  STAG Industrial

Life Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Life Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Life Storage is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

STAG Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STAG Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STAG Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Life Storage and STAG Industrial

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

The idea behind Life Storage and STAG Industrial 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.