Correlation Between Extra Space and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Extra Space and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on Extra Space and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Scandinavian Tobacco.
Diversification Opportunities for Extra Space and Scandinavian Tobacco
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Extra and Scandinavian is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Extra Space i.e., Extra Space and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Extra Space and Scandinavian Tobacco
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 1.53 times more return on investment than Scandinavian Tobacco. However, Extra Space is 1.53 times more volatile than Scandinavian Tobacco Group. It trades about 0.03 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.01 per unit of risk. If you would invest 14,338 in Extra Space Storage on September 4, 2024 and sell it today you would earn a total of 2,725 from holding Extra Space Storage or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.8% |
| Values | Daily Returns |
Extra Space Storage vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Extra Space Storage |
| Scandinavian Tobacco |
Extra Space and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Scandinavian Tobacco
The main advantage of trading using opposite Extra Space and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Extra Space vs. Samsung Electronics Co | Extra Space vs. Samsung Electronics Co | Extra Space vs. Hyundai Motor | Extra Space vs. Toyota Motor Corp |
| Scandinavian Tobacco vs. Bisichi Mining PLC | Scandinavian Tobacco vs. Ecclesiastical Insurance Office | Scandinavian Tobacco vs. Alfa Financial Software | Scandinavian Tobacco vs. GoldMining |
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 CEOs Directory module to screen CEOs from public companies around the world.
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