Correlation Between Charter Communications and Extra Space
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Extra Space Storage, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Extra Space.
Diversification Opportunities for Charter Communications and Extra Space
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charter and Extra is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Extra Space go up and down completely randomly.
Pair Corralation between Charter Communications and Extra Space
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.26 times more return on investment than Extra Space. However, Charter Communications is 1.26 times more volatile than Extra Space Storage. It trades about 0.32 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.15 per unit of risk. If you would invest 3,149 in Charter Communications on September 1, 2024 and sell it today you would earn a total of 833.00 from holding Charter Communications or generate 26.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Extra Space Storage
Performance |
| Timeline |
| Charter Communications |
| Extra Space Storage |
Charter Communications and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Extra Space
The main advantage of trading using opposite Charter Communications and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Intelbras SA | Charter Communications vs. Neogrid Participaes SA | Charter Communications vs. Mliuz SA | Charter Communications vs. Locaweb Servios de |
| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fras le SA | Extra Space vs. Western Digital | Extra Space vs. Energisa SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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