Correlation Between Extra Space and Adobe
Can any of the company-specific risk be diversified away by investing in both Extra Space and Adobe 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 Adobe 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 Adobe Inc, you can compare the effects of market volatilities on Extra Space and Adobe 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 Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Adobe.
Diversification Opportunities for Extra Space and Adobe
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Extra and Adobe is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc 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 Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of Extra Space i.e., Extra Space and Adobe go up and down completely randomly.
Pair Corralation between Extra Space and Adobe
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 1.11 times more return on investment than Adobe. However, Extra Space is 1.11 times more volatile than Adobe Inc. It trades about 0.09 of its potential returns per unit of risk. Adobe Inc is currently generating about 0.07 per unit of risk. If you would invest 23,977 in Extra Space Storage on September 3, 2024 and sell it today you would earn a total of 2,120 from holding Extra Space Storage or generate 8.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. Adobe Inc
Performance |
| Timeline |
| Extra Space Storage |
| Adobe Inc |
Extra Space and Adobe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Adobe
The main advantage of trading using opposite Extra Space and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Adobe 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 Adobe will offset losses from the drop in Adobe's long position.| Extra Space vs. Marvell Technology | Extra Space vs. Align Technology | Extra Space vs. Take Two Interactive Software | Extra Space vs. Bio Techne |
| Adobe vs. Autohome | Adobe vs. Charter Communications | Adobe vs. Lupatech SA | Adobe vs. Extra Space Storage |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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