Correlation Between Five Point and Extra Space
Can any of the company-specific risk be diversified away by investing in both Five Point and Extra Space 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 Five Point and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Point Holdings and Extra Space Storage, you can compare the effects of market volatilities on Five Point and Extra Space 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 Five Point with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Point and Extra Space.
Diversification Opportunities for Five Point and Extra Space
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Five and Extra is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Five Point Holdings and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage and Five Point 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 Five Point Holdings are associated (or correlated) with Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of Five Point i.e., Five Point and Extra Space go up and down completely randomly.
Pair Corralation between Five Point and Extra Space
Considering the 90-day investment horizon Five Point Holdings is expected to generate 1.87 times more return on investment than Extra Space. However, Five Point is 1.87 times more volatile than Extra Space Storage. It trades about 0.08 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.01 per unit of risk. If you would invest 215.00 in Five Point Holdings on November 20, 2024 and sell it today you would earn a total of 373.00 from holding Five Point Holdings or generate 173.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Point Holdings vs. Extra Space Storage
Performance |
| Timeline |
| Five Point Holdings |
| Extra Space Storage |
Five Point and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Point and Extra Space
The main advantage of trading using opposite Five Point and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Point position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| Five Point vs. Landsea Homes Corp | Five Point vs. AMREP | Five Point vs. American Realty Investors | Five Point vs. Forestar Group |
| Extra Space vs. CubeSmart | Extra Space vs. National Storage Affiliates | Extra Space vs. Public Storage | Extra Space vs. EastGroup 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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