Correlation Between Extra Space and Ren Redes
Can any of the company-specific risk be diversified away by investing in both Extra Space and Ren Redes 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 Ren Redes 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 Ren Redes Energeticas, you can compare the effects of market volatilities on Extra Space and Ren Redes 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 Ren Redes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Ren Redes.
Diversification Opportunities for Extra Space and Ren Redes
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Extra and Ren is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Ren Redes Energeticas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ren Redes Energeticas 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 Ren Redes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ren Redes Energeticas has no effect on the direction of Extra Space i.e., Extra Space and Ren Redes go up and down completely randomly.
Pair Corralation between Extra Space and Ren Redes
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 2.04 times more return on investment than Ren Redes. However, Extra Space is 2.04 times more volatile than Ren Redes Energeticas. It trades about 0.16 of its potential returns per unit of risk. Ren Redes Energeticas is currently generating about 0.33 per unit of risk. If you would invest 16,191 in Extra Space Storage on September 2, 2024 and sell it today you would earn a total of 1,034 from holding Extra Space Storage or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. Ren Redes Energeticas
Performance |
| Timeline |
| Extra Space Storage |
| Ren Redes Energeticas |
Extra Space and Ren Redes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Ren Redes
The main advantage of trading using opposite Extra Space and Ren Redes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Ren Redes 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 Ren Redes will offset losses from the drop in Ren Redes' long position.| Extra Space vs. Uniper SE | Extra Space vs. Mulberry Group PLC | Extra Space vs. London Security Plc | Extra Space vs. Triad Group PLC |
| Ren Redes vs. Uniper SE | Ren Redes vs. Mulberry Group PLC | Ren Redes vs. London Security Plc | Ren Redes vs. Triad Group PLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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