Correlation Between Extra Space and Datagroup
Can any of the company-specific risk be diversified away by investing in both Extra Space and Datagroup 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 Datagroup 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 Datagroup SE, you can compare the effects of market volatilities on Extra Space and Datagroup 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 Datagroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Datagroup.
Diversification Opportunities for Extra Space and Datagroup
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extra and Datagroup is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE 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 Datagroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datagroup SE has no effect on the direction of Extra Space i.e., Extra Space and Datagroup go up and down completely randomly.
Pair Corralation between Extra Space and Datagroup
Assuming the 90 days trading horizon Extra Space Storage is expected to under-perform the Datagroup. But the stock apears to be less risky and, when comparing its historical volatility, Extra Space Storage is 2.39 times less risky than Datagroup. The stock trades about -0.14 of its potential returns per unit of risk. The Datagroup SE is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,975 in Datagroup SE on September 12, 2024 and sell it today you would earn a total of 685.00 from holding Datagroup SE or generate 17.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Extra Space Storage vs. Datagroup SE
Performance |
| Timeline |
| Extra Space Storage |
| Datagroup SE |
Extra Space and Datagroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Datagroup
The main advantage of trading using opposite Extra Space and Datagroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Datagroup 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 Datagroup will offset losses from the drop in Datagroup's long position.| Extra Space vs. Hong Kong Land | Extra Space vs. Neometals | Extra Space vs. Coor Service Management | Extra Space vs. Fidelity Sustainable USD |
| Datagroup vs. Hong Kong Land | Datagroup vs. Neometals | Datagroup vs. Coor Service Management | Datagroup vs. Fidelity Sustainable USD |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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