Correlation Between Extra Space and Prologis
Can any of the company-specific risk be diversified away by investing in both Extra Space and Prologis 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 Prologis 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 Prologis, you can compare the effects of market volatilities on Extra Space and Prologis 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 Prologis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Prologis.
Diversification Opportunities for Extra Space and Prologis
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Extra and Prologis is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis 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 Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of Extra Space i.e., Extra Space and Prologis go up and down completely randomly.
Pair Corralation between Extra Space and Prologis
Considering the 90-day investment horizon Extra Space Storage is expected to generate 0.97 times more return on investment than Prologis. However, Extra Space Storage is 1.03 times less risky than Prologis. It trades about 0.03 of its potential returns per unit of risk. Prologis is currently generating about -0.01 per unit of risk. If you would invest 14,445 in Extra Space Storage on November 9, 2024 and sell it today you would earn a total of 1,160 from holding Extra Space Storage or generate 8.03% 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. Prologis
Performance |
| Timeline |
| Extra Space Storage |
| Prologis |
Extra Space and Prologis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and Prologis
The main advantage of trading using opposite Extra Space and Prologis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Prologis 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 Prologis will offset losses from the drop in Prologis' long position.| Extra Space vs. CubeSmart | Extra Space vs. National Storage Affiliates | Extra Space vs. Public Storage | Extra Space vs. EastGroup Properties |
| Prologis vs. Extra Space Storage | Prologis vs. CubeSmart | Prologis vs. STAG Industrial | Prologis vs. Innovative Industrial Properties |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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