Correlation Between Inspiration Healthcare and Extra Space
Can any of the company-specific risk be diversified away by investing in both Inspiration Healthcare 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 Inspiration Healthcare and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspiration Healthcare Group and Extra Space Storage, you can compare the effects of market volatilities on Inspiration Healthcare 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 Inspiration Healthcare with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspiration Healthcare and Extra Space.
Diversification Opportunities for Inspiration Healthcare and Extra Space
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inspiration and Extra is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group 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 Inspiration Healthcare 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 Inspiration Healthcare Group 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 Inspiration Healthcare i.e., Inspiration Healthcare and Extra Space go up and down completely randomly.
Pair Corralation between Inspiration Healthcare and Extra Space
Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the Extra Space. In addition to that, Inspiration Healthcare is 3.11 times more volatile than Extra Space Storage. It trades about -0.03 of its total potential returns per unit of risk. Extra Space Storage is currently generating about 0.1 per unit of volatility. If you would invest 14,574 in Extra Space Storage on September 3, 2024 and sell it today you would earn a total of 2,651 from holding Extra Space Storage or generate 18.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Inspiration Healthcare Group vs. Extra Space Storage
Performance |
| Timeline |
| Inspiration Healthcare |
| Extra Space Storage |
Inspiration Healthcare and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspiration Healthcare and Extra Space
The main advantage of trading using opposite Inspiration Healthcare and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspiration Healthcare 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.| Inspiration Healthcare vs. Walmart | Inspiration Healthcare vs. Volkswagen AG | Inspiration Healthcare vs. Deutsche Post AG | Inspiration Healthcare vs. United Parcel Service |
| Extra Space vs. Gaztransport et Technigaz | Extra Space vs. Summit Materials Cl | Extra Space vs. DFS Furniture PLC | Extra Space vs. Fevertree Drinks Plc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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