Correlation Between Johnson Matthey and Extra Space
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey 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 Johnson Matthey and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Matthey PLC and Extra Space Storage, you can compare the effects of market volatilities on Johnson Matthey 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 Johnson Matthey with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Extra Space.
Diversification Opportunities for Johnson Matthey and Extra Space
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Johnson and Extra is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC 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 Johnson Matthey 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 Johnson Matthey PLC 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 Johnson Matthey i.e., Johnson Matthey and Extra Space go up and down completely randomly.
Pair Corralation between Johnson Matthey and Extra Space
Assuming the 90 days trading horizon Johnson Matthey PLC is expected to under-perform the Extra Space. In addition to that, Johnson Matthey is 1.43 times more volatile than Extra Space Storage. It trades about -0.13 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 16,580 in Extra Space Storage on September 1, 2024 and sell it today you would earn a total of 645.00 from holding Extra Space Storage or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Johnson Matthey PLC vs. Extra Space Storage
Performance |
| Timeline |
| Johnson Matthey PLC |
| Extra Space Storage |
Johnson Matthey and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and Extra Space
The main advantage of trading using opposite Johnson Matthey and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey 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.| Johnson Matthey vs. Teradata Corp | Johnson Matthey vs. MTI Wireless Edge | Johnson Matthey vs. Spirent Communications plc | Johnson Matthey vs. Charter Communications Cl |
| Extra Space vs. AcadeMedia AB | Extra Space vs. Ecclesiastical Insurance Office | Extra Space vs. Fortune Brands Home | Extra Space vs. G5 Entertainment AB |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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