Correlation Between Extra Space and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Extra Space and Agilent Technologies 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 Agilent Technologies 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 Agilent Technologies, you can compare the effects of market volatilities on Extra Space and Agilent Technologies 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 Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Agilent Technologies.
Diversification Opportunities for Extra Space and Agilent Technologies
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extra and Agilent is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies 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 Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Extra Space i.e., Extra Space and Agilent Technologies go up and down completely randomly.
Pair Corralation between Extra Space and Agilent Technologies
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 1.67 times more return on investment than Agilent Technologies. However, Extra Space is 1.67 times more volatile than Agilent Technologies. It trades about 0.12 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.07 per unit of risk. If you would invest 16,667 in Extra Space Storage on September 2, 2024 and sell it today you would earn a total of 9,430 from holding Extra Space Storage or generate 56.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 88.83% |
| Values | Daily Returns |
Extra Space Storage vs. Agilent Technologies
Performance |
| Timeline |
| Extra Space Storage |
| Agilent Technologies |
Extra Space and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Agilent Technologies
The main advantage of trading using opposite Extra Space and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fras le SA | Extra Space vs. Western Digital | Extra Space vs. Energisa SA |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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