Correlation Between Avanos Medical and Extra Space
Can any of the company-specific risk be diversified away by investing in both Avanos Medical 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 Avanos Medical and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanos Medical and Extra Space Storage, you can compare the effects of market volatilities on Avanos Medical 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 Avanos Medical with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and Extra Space.
Diversification Opportunities for Avanos Medical and Extra Space
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Avanos and Extra is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical 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 Avanos Medical 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 Avanos Medical 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 Avanos Medical i.e., Avanos Medical and Extra Space go up and down completely randomly.
Pair Corralation between Avanos Medical and Extra Space
Assuming the 90 days trading horizon Avanos Medical is expected to generate 4.17 times less return on investment than Extra Space. In addition to that, Avanos Medical is 1.9 times more volatile than Extra Space Storage. It trades about 0.01 of its total potential returns per unit of risk. Extra Space Storage is currently generating about 0.12 per unit of volatility. If you would invest 13,309 in Extra Space Storage on September 3, 2024 and sell it today you would earn a total of 2,806 from holding Extra Space Storage or generate 21.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanos Medical vs. Extra Space Storage
Performance |
| Timeline |
| Avanos Medical |
| Extra Space Storage |
Avanos Medical and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanos Medical and Extra Space
The main advantage of trading using opposite Avanos Medical and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical 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.| Avanos Medical vs. Lifeway Foods | Avanos Medical vs. DEVRY EDUCATION GRP | Avanos Medical vs. CAL MAINE FOODS | Avanos Medical vs. Xinhua Winshare Publishing |
| Extra Space vs. Mitsui Chemicals | Extra Space vs. Caltagirone SpA | Extra Space vs. Reliance Steel Aluminum | Extra Space vs. RELIANCE STEEL AL |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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