Correlation Between Extra Space and Tesla
Can any of the company-specific risk be diversified away by investing in both Extra Space and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on Extra Space and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Tesla.
Diversification Opportunities for Extra Space and Tesla
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Extra and Tesla is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Extra Space i.e., Extra Space and Tesla go up and down completely randomly.
Pair Corralation between Extra Space and Tesla
Assuming the 90 days trading horizon Extra Space is expected to generate 8.54 times less return on investment than Tesla. In addition to that, Extra Space is 1.1 times more volatile than Tesla Inc. It trades about 0.07 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.63 per unit of volatility. If you would invest 6,106 in Tesla Inc on September 19, 2024 and sell it today you would earn a total of 3,014 from holding Tesla Inc or generate 49.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Extra Space Storage vs. Tesla Inc
Performance |
| Timeline |
| Extra Space Storage |
| Tesla Inc |
Extra Space and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Tesla
The main advantage of trading using opposite Extra Space and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fundo Investimento Imobiliario | Extra Space vs. LESTE FDO INV | Extra Space vs. Fras le SA |
| Tesla vs. Spotify Technology SA | Tesla vs. Zoom Video Communications | Tesla vs. United States Steel | Tesla 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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