Correlation Between Extra Space and BYD
Can any of the company-specific risk be diversified away by investing in both Extra Space and BYD 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 BYD 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 BYD Co, you can compare the effects of market volatilities on Extra Space and BYD 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 BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and BYD.
Diversification Opportunities for Extra Space and BYD
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Extra and BYD is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co 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 BYD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Extra Space i.e., Extra Space and BYD go up and down completely randomly.
Pair Corralation between Extra Space and BYD
Assuming the 90 days trading horizon Extra Space Storage is expected to under-perform the BYD. But the stock apears to be less risky and, when comparing its historical volatility, Extra Space Storage is 5.65 times less risky than BYD. The stock trades about -0.06 of its potential returns per unit of risk. The BYD Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,709 in BYD Co on November 2, 2024 and sell it today you would earn a total of 851.00 from holding BYD Co or generate 31.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. BYD Co
Performance |
| Timeline |
| Extra Space Storage |
| BYD Co |
Extra Space and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and BYD
The main advantage of trading using opposite Extra Space and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, BYD 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 BYD will offset losses from the drop in BYD'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 |
| BYD vs. Empire Metals Limited | BYD vs. Infrastrutture Wireless Italiane | BYD vs. Geely Automobile Holdings | BYD vs. Power Metal Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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