Correlation Between Realty Income and Extra Space
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Extra Space Storage, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Extra Space.
Diversification Opportunities for Realty Income and Extra Space
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Realty and Extra is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income 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 Realty Income 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 Realty Income 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 Realty Income i.e., Realty Income and Extra Space go up and down completely randomly.
Pair Corralation between Realty Income and Extra Space
Taking into account the 90-day investment horizon Realty Income is expected to generate 19.35 times less return on investment than Extra Space. But when comparing it to its historical volatility, Realty Income is 1.56 times less risky than Extra Space. It trades about 0.0 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 13,557 in Extra Space Storage on September 12, 2024 and sell it today you would earn a total of 2,481 from holding Extra Space Storage or generate 18.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. Extra Space Storage
Performance |
| Timeline |
| Realty Income |
| Extra Space Storage |
Realty Income and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Extra Space
The main advantage of trading using opposite Realty Income and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |