Correlation Between Extra Space and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Extra Space and Teradata Corp 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 Teradata Corp 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 Teradata Corp, you can compare the effects of market volatilities on Extra Space and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Teradata Corp.
Diversification Opportunities for Extra Space and Teradata Corp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extra and Teradata is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Extra Space i.e., Extra Space and Teradata Corp go up and down completely randomly.
Pair Corralation between Extra Space and Teradata Corp
Assuming the 90 days trading horizon Extra Space is expected to generate 1.39 times less return on investment than Teradata Corp. But when comparing it to its historical volatility, Extra Space Storage is 1.67 times less risky than Teradata Corp. It trades about 0.26 of its potential returns per unit of risk. Teradata Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,082 in Teradata Corp on November 2, 2024 and sell it today you would earn a total of 178.00 from holding Teradata Corp or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Extra Space Storage vs. Teradata Corp
Performance |
| Timeline |
| Extra Space Storage |
| Teradata Corp |
Extra Space and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Teradata Corp
The main advantage of trading using opposite Extra Space and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| Extra Space vs. Capital Drilling | Extra Space vs. Eastinco Mining Exploration | Extra Space vs. AMG Advanced Metallurgical | Extra Space vs. Commerzbank AG |
| Teradata Corp vs. McEwen Mining | Teradata Corp vs. Eastinco Mining Exploration | Teradata Corp vs. Beazer Homes USA | Teradata Corp vs. Hochschild Mining 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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