Correlation Between Extra Space and Autohome
Can any of the company-specific risk be diversified away by investing in both Extra Space and Autohome 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 Autohome 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 Autohome, you can compare the effects of market volatilities on Extra Space and Autohome 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 Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Autohome.
Diversification Opportunities for Extra Space and Autohome
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Extra and Autohome is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome 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 Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome has no effect on the direction of Extra Space i.e., Extra Space and Autohome go up and down completely randomly.
Pair Corralation between Extra Space and Autohome
Assuming the 90 days trading horizon Extra Space is expected to generate 2.46 times less return on investment than Autohome. But when comparing it to its historical volatility, Extra Space Storage is 1.55 times less risky than Autohome. It trades about 0.04 of its potential returns per unit of risk. Autohome is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,646 in Autohome on November 28, 2024 and sell it today you would earn a total of 42.00 from holding Autohome or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. Autohome
Performance |
| Timeline |
| Extra Space Storage |
| Autohome |
Extra Space and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Autohome
The main advantage of trading using opposite Extra Space and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Autohome 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 Autohome will offset losses from the drop in Autohome's long position.| Extra Space vs. United Rentals | Extra Space vs. Metalrgica Riosulense SA | Extra Space vs. METISA Metalrgica Timboense | Extra Space vs. STAG Industrial, |
| Autohome vs. Broadridge Financial Solutions, | Autohome vs. Capital One Financial | Autohome vs. Truist Financial | Autohome vs. Prudential Financial |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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