Correlation Between Fidelity Sustainable and Extra Space
Can any of the company-specific risk be diversified away by investing in both Fidelity Sustainable 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 Fidelity Sustainable and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Sustainable USD and Extra Space Storage, you can compare the effects of market volatilities on Fidelity Sustainable 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 Fidelity Sustainable with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sustainable and Extra Space.
Diversification Opportunities for Fidelity Sustainable and Extra Space
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Extra is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable USD 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 Fidelity Sustainable 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 Fidelity Sustainable USD 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 Fidelity Sustainable i.e., Fidelity Sustainable and Extra Space go up and down completely randomly.
Pair Corralation between Fidelity Sustainable and Extra Space
Assuming the 90 days trading horizon Fidelity Sustainable is expected to generate 1.64 times less return on investment than Extra Space. But when comparing it to its historical volatility, Fidelity Sustainable USD is 4.04 times less risky than Extra Space. It trades about 0.07 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,730 in Extra Space Storage on September 12, 2024 and sell it today you would earn a total of 1,210 from holding Extra Space Storage or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Fidelity Sustainable USD vs. Extra Space Storage
Performance |
| Timeline |
| Fidelity Sustainable USD |
| Extra Space Storage |
Fidelity Sustainable and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Sustainable and Extra Space
The main advantage of trading using opposite Fidelity Sustainable and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Sustainable 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.| Fidelity Sustainable vs. GraniteShares 3x Short | Fidelity Sustainable vs. WisdomTree Natural Gas | Fidelity Sustainable vs. Leverage Shares 3x | Fidelity Sustainable vs. WisdomTree Natural Gas |
| Extra Space vs. Monks Investment Trust | Extra Space vs. Livermore Investments Group | Extra Space vs. Cars Inc | Extra Space vs. Sligro Food Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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