Correlation Between Extra Space and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Extra Space and Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Extra Space and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Sumitomo Mitsui.
Diversification Opportunities for Extra Space and Sumitomo Mitsui
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Extra and Sumitomo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Extra Space i.e., Extra Space and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Extra Space and Sumitomo Mitsui
Assuming the 90 days trading horizon Extra Space is expected to generate 11.05 times less return on investment than Sumitomo Mitsui. In addition to that, Extra Space is 1.68 times more volatile than Sumitomo Mitsui Financial. It trades about 0.01 of its total potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.1 per unit of volatility. If you would invest 8,748 in Sumitomo Mitsui Financial on October 22, 2024 and sell it today you would earn a total of 198.00 from holding Sumitomo Mitsui Financial or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extra Space Storage vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Extra Space Storage |
| Sumitomo Mitsui Financial |
Extra Space and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Sumitomo Mitsui
The main advantage of trading using opposite Extra Space and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Extra Space vs. JB Hunt Transport | Extra Space vs. American Airlines Group | Extra Space vs. The Home Depot | Extra Space vs. Zoom Video Communications |
| Sumitomo Mitsui vs. Eastman Chemical | Sumitomo Mitsui vs. Healthpeak Properties | Sumitomo Mitsui vs. Extra Space Storage | Sumitomo Mitsui vs. Hospital Mater Dei |
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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