Correlation Between Extra Space and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Extra Space and PayPal Holdings 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 PayPal Holdings 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 PayPal Holdings, you can compare the effects of market volatilities on Extra Space and PayPal Holdings 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 PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and PayPal Holdings.
Diversification Opportunities for Extra Space and PayPal Holdings
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Extra and PayPal is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings 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 PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Extra Space i.e., Extra Space and PayPal Holdings go up and down completely randomly.
Pair Corralation between Extra Space and PayPal Holdings
Assuming the 90 days trading horizon Extra Space Storage is expected to generate 1.24 times more return on investment than PayPal Holdings. However, Extra Space is 1.24 times more volatile than PayPal Holdings. It trades about 0.24 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.28 per unit of risk. If you would invest 23,400 in Extra Space Storage on September 5, 2024 and sell it today you would earn a total of 3,406 from holding Extra Space Storage or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Extra Space Storage vs. PayPal Holdings
Performance |
| Timeline |
| Extra Space Storage |
| PayPal Holdings |
Extra Space and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and PayPal Holdings
The main advantage of trading using opposite Extra Space and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| Extra Space vs. Hospital Mater Dei | Extra Space vs. Take Two Interactive Software | Extra Space vs. CM Hospitalar SA | Extra Space vs. Zoom Video Communications |
| PayPal Holdings vs. Ameriprise Financial | PayPal Holdings vs. Apartment Investment and | PayPal Holdings vs. New Oriental Education | PayPal Holdings vs. Bread Financial Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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