Correlation Between Extra Space and United States
Can any of the company-specific risk be diversified away by investing in both Extra Space and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on Extra Space and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and United States.
Diversification Opportunities for Extra Space and United States
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extra and United is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Extra Space i.e., Extra Space and United States go up and down completely randomly.
Pair Corralation between Extra Space and United States
Assuming the 90 days trading horizon Extra Space is expected to generate 2.1 times less return on investment than United States. But when comparing it to its historical volatility, Extra Space Storage is 1.4 times less risky than United States. It trades about 0.05 of its potential returns per unit of risk. United States Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,699 in United States Steel on August 31, 2024 and sell it today you would earn a total of 11,855 from holding United States Steel or generate 110.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.1% |
| Values | Daily Returns |
Extra Space Storage vs. United States Steel
Performance |
| Timeline |
| Extra Space Storage |
| United States Steel |
Extra Space and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and United States
The main advantage of trading using opposite Extra Space and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fras le SA | Extra Space vs. Western Digital | Extra Space vs. Energisa SA |
| United States vs. Companhia Paranaense de | United States vs. Fras le SA | United States vs. Energisa SA | United States vs. Clave Indices De |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |