Correlation Between Extra Space and PagSeguro Digital
Can any of the company-specific risk be diversified away by investing in both Extra Space and PagSeguro Digital 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 PagSeguro Digital 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 PagSeguro Digital, you can compare the effects of market volatilities on Extra Space and PagSeguro Digital 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 PagSeguro Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and PagSeguro Digital.
Diversification Opportunities for Extra Space and PagSeguro Digital
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Extra and PagSeguro is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital 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 PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of Extra Space i.e., Extra Space and PagSeguro Digital go up and down completely randomly.
Pair Corralation between Extra Space and PagSeguro Digital
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 0.74 times more return on investment than PagSeguro Digital. However, Extra Space Storage is 1.35 times less risky than PagSeguro Digital. It trades about 0.14 of its potential returns per unit of risk. PagSeguro Digital is currently generating about -0.08 per unit of risk. If you would invest 18,487 in Extra Space Storage on September 1, 2024 and sell it today you would earn a total of 7,610 from holding Extra Space Storage or generate 41.16% 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. PagSeguro Digital
Performance |
| Timeline |
| Extra Space Storage |
| PagSeguro Digital |
Extra Space and PagSeguro Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and PagSeguro Digital
The main advantage of trading using opposite Extra Space and PagSeguro Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, PagSeguro Digital 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 PagSeguro Digital will offset losses from the drop in PagSeguro Digital'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 |
| PagSeguro Digital vs. Spotify Technology SA | PagSeguro Digital vs. Paycom Software | PagSeguro Digital vs. Mitsubishi UFJ Financial | PagSeguro Digital vs. Dell Technologies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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