Correlation Between Extra Space and Associated British
Can any of the company-specific risk be diversified away by investing in both Extra Space and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Extra Space and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Associated British.
Diversification Opportunities for Extra Space and Associated British
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Extra and Associated is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Extra Space i.e., Extra Space and Associated British go up and down completely randomly.
Pair Corralation between Extra Space and Associated British
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 1.3 times more return on investment than Associated British. However, Extra Space is 1.3 times more volatile than Associated British Foods. It trades about 0.07 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.04 per unit of risk. If you would invest 12,184 in Extra Space Storage on August 29, 2024 and sell it today you would earn a total of 5,181 from holding Extra Space Storage or generate 42.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.1% |
| Values | Daily Returns |
Extra Space Storage vs. Associated British Foods
Performance |
| Timeline |
| Extra Space Storage |
| Associated British Foods |
Extra Space and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Associated British
The main advantage of trading using opposite Extra Space and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Extra Space vs. Lendinvest PLC | Extra Space vs. Neometals | Extra Space vs. Albion Technology General | Extra Space vs. Jupiter Fund Management |
| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Toyota Motor Corp | Associated British vs. MOL Hungarian Oil |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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