Correlation Between Extra Space and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Extra Space and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on Extra Space and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Applied Materials.
Diversification Opportunities for Extra Space and Applied Materials
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Extra and Applied is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Extra Space i.e., Extra Space and Applied Materials go up and down completely randomly.
Pair Corralation between Extra Space and Applied Materials
Assuming the 90 days trading horizon Extra Space is expected to generate 6.23 times less return on investment than Applied Materials. But when comparing it to its historical volatility, Extra Space Storage is 3.09 times less risky than Applied Materials. It trades about 0.13 of its potential returns per unit of risk. Applied Materials is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 16,677 in Applied Materials on October 28, 2024 and sell it today you would earn a total of 2,335 from holding Applied Materials or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. Applied Materials
Performance |
| Timeline |
| Extra Space Storage |
| Applied Materials |
Extra Space and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Applied Materials
The main advantage of trading using opposite Extra Space and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Extra Space vs. Rosslyn Data Technologies | Extra Space vs. Silver Bullet Data | Extra Space vs. Micron Technology | Extra Space vs. Sabien Technology Group |
| Applied Materials vs. Fresenius Medical Care | Applied Materials vs. Creo Medical Group | Applied Materials vs. Medical Properties Trust | Applied Materials vs. AMG Advanced Metallurgical |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |