Correlation Between Extra Space and GLADSTONE LAND
Can any of the company-specific risk be diversified away by investing in both Extra Space and GLADSTONE LAND 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 GLADSTONE LAND 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 GLADSTONE LAND L 001, you can compare the effects of market volatilities on Extra Space and GLADSTONE LAND 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 GLADSTONE LAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and GLADSTONE LAND.
Diversification Opportunities for Extra Space and GLADSTONE LAND
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Extra and GLADSTONE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and GLADSTONE LAND L 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLADSTONE LAND L 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 GLADSTONE LAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLADSTONE LAND L has no effect on the direction of Extra Space i.e., Extra Space and GLADSTONE LAND go up and down completely randomly.
Pair Corralation between Extra Space and GLADSTONE LAND
Assuming the 90 days horizon Extra Space Storage is expected to generate 0.99 times more return on investment than GLADSTONE LAND. However, Extra Space Storage is 1.01 times less risky than GLADSTONE LAND. It trades about 0.08 of its potential returns per unit of risk. GLADSTONE LAND L 001 is currently generating about -0.03 per unit of risk. If you would invest 11,277 in Extra Space Storage on September 15, 2024 and sell it today you would earn a total of 3,863 from holding Extra Space Storage or generate 34.26% 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. GLADSTONE LAND L 001
Performance |
| Timeline |
| Extra Space Storage |
| GLADSTONE LAND L |
Extra Space and GLADSTONE LAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extra Space and GLADSTONE LAND
The main advantage of trading using opposite Extra Space and GLADSTONE LAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, GLADSTONE LAND 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 GLADSTONE LAND will offset losses from the drop in GLADSTONE LAND's long position.| Extra Space vs. REXFORD INDREALTY DL 01 | Extra Space vs. CubeSmart | Extra Space vs. First Industrial Realty | Extra Space vs. National Storage Affiliates |
| GLADSTONE LAND vs. Extra Space Storage | GLADSTONE LAND vs. REXFORD INDREALTY DL 01 | GLADSTONE LAND vs. CubeSmart | GLADSTONE LAND vs. First Industrial Realty |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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