Correlation Between Extra Space and National Beverage
Can any of the company-specific risk be diversified away by investing in both Extra Space and National Beverage 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 Extra Space and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extra Space Storage and National Beverage Corp, you can compare the effects of market volatilities on Extra Space and National Beverage 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 Extra Space with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and National Beverage.
Diversification Opportunities for Extra Space and National Beverage
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extra and National is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Extra Space 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 Extra Space Storage are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Extra Space i.e., Extra Space and National Beverage go up and down completely randomly.
Pair Corralation between Extra Space and National Beverage
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 0.67 times more return on investment than National Beverage. However, Extra Space Storage is 1.49 times less risky than National Beverage. It trades about -0.09 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.13 per unit of risk. If you would invest 16,389 in Extra Space Storage on September 14, 2024 and sell it today you would lose (461.00) from holding Extra Space Storage or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. National Beverage Corp
Performance |
| Timeline |
| Extra Space Storage |
| National Beverage Corp |
Extra Space and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and National Beverage
The main advantage of trading using opposite Extra Space and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, National Beverage 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 Beverage will offset losses from the drop in National Beverage's long position.| Extra Space vs. Ross Stores | Extra Space vs. Bisichi Mining PLC | Extra Space vs. Hochschild Mining plc | Extra Space vs. AMG Advanced Metallurgical |
| National Beverage vs. Pets at Home | National Beverage vs. Aeorema Communications Plc | National Beverage vs. Extra Space Storage | National Beverage vs. CAP LEASE AVIATION |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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