Correlation Between Extra Space and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Extra Space and Ashtead Group 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 Ashtead Group 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 Ashtead Group PLC, you can compare the effects of market volatilities on Extra Space and Ashtead Group 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Ashtead Group.
Diversification Opportunities for Extra Space and Ashtead Group
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Extra and Ashtead is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group PLC 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of Extra Space i.e., Extra Space and Ashtead Group go up and down completely randomly.
Pair Corralation between Extra Space and Ashtead Group
Assuming the 90 days trading horizon Extra Space is expected to generate 1.13 times less return on investment than Ashtead Group. In addition to that, Extra Space is 1.26 times more volatile than Ashtead Group PLC. It trades about 0.03 of its total potential returns per unit of risk. Ashtead Group PLC is currently generating about 0.04 per unit of volatility. If you would invest 480,623 in Ashtead Group PLC on September 4, 2024 and sell it today you would earn a total of 146,977 from holding Ashtead Group PLC or generate 30.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.99% |
| Values | Daily Returns |
Extra Space Storage vs. Ashtead Group PLC
Performance |
| Timeline |
| Extra Space Storage |
| Ashtead Group PLC |
Extra Space and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Ashtead Group
The main advantage of trading using opposite Extra Space and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group'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 |
| Ashtead Group vs. Samsung Electronics Co | Ashtead Group vs. Samsung Electronics Co | Ashtead Group vs. Hyundai Motor | Ashtead Group vs. Toyota Motor Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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