Correlation Between Extra Space and Cigna
Can any of the company-specific risk be diversified away by investing in both Extra Space and Cigna 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 Cigna 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 Cigna, you can compare the effects of market volatilities on Extra Space and Cigna 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 Cigna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Cigna.
Diversification Opportunities for Extra Space and Cigna
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Extra and Cigna is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Cigna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna 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 Cigna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna has no effect on the direction of Extra Space i.e., Extra Space and Cigna go up and down completely randomly.
Pair Corralation between Extra Space and Cigna
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 2.51 times more return on investment than Cigna. However, Extra Space is 2.51 times more volatile than Cigna. It trades about 0.15 of its potential returns per unit of risk. Cigna is currently generating about 0.32 per unit of risk. If you would invest 24,000 in Extra Space Storage on September 2, 2024 and sell it today you would earn a total of 2,097 from holding Extra Space Storage or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. Cigna
Performance |
| Timeline |
| Extra Space Storage |
| Cigna |
Extra Space and Cigna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Cigna
The main advantage of trading using opposite Extra Space and Cigna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Cigna 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 Cigna will offset losses from the drop in Cigna's long position.| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fras le SA | Extra Space vs. Western Digital | Extra Space vs. Energisa SA |
| Cigna vs. Spotify Technology SA | Cigna vs. Extra Space Storage | Cigna vs. Broadcom | Cigna vs. Bemobi Mobile Tech |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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