Correlation Between Extra Space and SSP Group
Can any of the company-specific risk be diversified away by investing in both Extra Space and SSP 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 SSP 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 SSP Group PLC, you can compare the effects of market volatilities on Extra Space and SSP 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 SSP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and SSP Group.
Diversification Opportunities for Extra Space and SSP Group
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extra and SSP is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and SSP Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSP 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 SSP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSP Group PLC has no effect on the direction of Extra Space i.e., Extra Space and SSP Group go up and down completely randomly.
Pair Corralation between Extra Space and SSP Group
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 0.75 times more return on investment than SSP Group. However, Extra Space Storage is 1.33 times less risky than SSP Group. It trades about 0.07 of its potential returns per unit of risk. SSP Group PLC is currently generating about -0.01 per unit of risk. If you would invest 12,351 in Extra Space Storage on September 14, 2024 and sell it today you would earn a total of 3,575 from holding Extra Space Storage or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Extra Space Storage vs. SSP Group PLC
Performance |
| Timeline |
| Extra Space Storage |
| SSP Group PLC |
Extra Space and SSP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and SSP Group
The main advantage of trading using opposite Extra Space and SSP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, SSP 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 SSP Group will offset losses from the drop in SSP Group's long position.| Extra Space vs. Ross Stores | Extra Space vs. Bisichi Mining PLC | Extra Space vs. Hochschild Mining plc | Extra Space vs. AMG Advanced Metallurgical |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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