Correlation Between National Storage and Extra Space
Can any of the company-specific risk be diversified away by investing in both National Storage and Extra Space 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 National Storage and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage Affiliates and Extra Space Storage, you can compare the effects of market volatilities on National Storage and Extra Space 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 National Storage with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Extra Space.
Diversification Opportunities for National Storage and Extra Space
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Extra is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage and National Storage 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 National Storage Affiliates are associated (or correlated) with Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of National Storage i.e., National Storage and Extra Space go up and down completely randomly.
Pair Corralation between National Storage and Extra Space
Assuming the 90 days horizon National Storage Affiliates is expected to generate 1.53 times more return on investment than Extra Space. However, National Storage is 1.53 times more volatile than Extra Space Storage. It trades about 0.18 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.2 per unit of risk. If you would invest 3,956 in National Storage Affiliates on August 29, 2024 and sell it today you would earn a total of 322.00 from holding National Storage Affiliates or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage Affiliates vs. Extra Space Storage
Performance |
| Timeline |
| National Storage Aff |
| Extra Space Storage |
National Storage and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Extra Space
The main advantage of trading using opposite National Storage and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| National Storage vs. Superior Plus Corp | National Storage vs. Origin Agritech | National Storage vs. Identiv | National Storage vs. INTUITIVE SURGICAL |
| Extra Space vs. CPU SOFTWAREHOUSE | Extra Space vs. VITEC SOFTWARE GROUP | Extra Space vs. Xinhua Winshare Publishing | Extra Space vs. Laureate Education |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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