Correlation Between Extra Space and Sydbank
Can any of the company-specific risk be diversified away by investing in both Extra Space and Sydbank 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 Sydbank 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 Sydbank, you can compare the effects of market volatilities on Extra Space and Sydbank 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 Sydbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Sydbank.
Diversification Opportunities for Extra Space and Sydbank
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Extra and Sydbank is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank 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 Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Extra Space i.e., Extra Space and Sydbank go up and down completely randomly.
Pair Corralation between Extra Space and Sydbank
Assuming the 90 days trading horizon Extra Space is expected to generate 1.6 times less return on investment than Sydbank. But when comparing it to its historical volatility, Extra Space Storage is 1.58 times less risky than Sydbank. It trades about 0.22 of its potential returns per unit of risk. Sydbank is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 35,260 in Sydbank on October 20, 2024 and sell it today you would earn a total of 2,680 from holding Sydbank or generate 7.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Extra Space Storage vs. Sydbank
Performance |
| Timeline |
| Extra Space Storage |
| Sydbank |
Extra Space and Sydbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Sydbank
The main advantage of trading using opposite Extra Space and Sydbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Sydbank 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 Sydbank will offset losses from the drop in Sydbank's long position.| Extra Space vs. Empire Metals Limited | Extra Space vs. Atalaya Mining | Extra Space vs. Liberty Media Corp | Extra Space vs. XLMedia PLC |
| Sydbank vs. First Class Metals | Sydbank vs. URU Metals | Sydbank vs. Jacquet Metal Service | Sydbank vs. Supermarket Income REIT |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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