Correlation Between COPT Defense and SmartStop Self

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

By analyzing existing cross correlation between COPT Defense Properties and SmartStop Self Storage, you can compare the effects of market volatilities on COPT Defense and SmartStop Self 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 COPT Defense with a short position of SmartStop Self. Check out your portfolio center. Please also check ongoing floating volatility patterns of COPT Defense and SmartStop Self.

Diversification Opportunities for COPT Defense and SmartStop Self

0.23

Correlation Coefficient

COPT Defense  SmartStop Self

Modest diversification

The 3 months correlation between COPT and SmartStop is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding COPT Defense Properties and SmartStop Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartStop Self Storage and COPT Defense 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 COPT Defense Properties are associated (or correlated) with SmartStop Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartStop Self Storage has no effect on the direction of COPT Defense i.e., COPT Defense and SmartStop Self go up and down completely randomly.

Pair Corralation between COPT Defense and SmartStop Self

Considering the 90-day investment horizon COPT Defense Properties is expected to generate 0.77 times more return on investment than SmartStop Self. However, COPT Defense Properties is 1.29 times less risky than SmartStop Self. It trades about 0.03 of its potential returns per unit of risk. SmartStop Self Storage is currently generating about -0.08 per unit of risk. If you would invest  2,695  in COPT Defense Properties on May 15, 2025 and sell it today you would earn a total of  42.00  from holding COPT Defense Properties or generate 1.56% return on investment over 90 days.

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

COPT Defense Properties  vs.  SmartStop Self Storage

COPT Defense Properties

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COPT Defense Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, COPT Defense is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

SmartStop Self Storage

Risk-Adjusted Performance

Weakest

Over the last 90 days SmartStop Self Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with COPT Defense and SmartStop Self

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

The idea behind COPT Defense Properties and SmartStop Self Storage 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.