Correlation Between Prologis and Extra Space
Can any of the company-specific risk be diversified away by investing in both Prologis 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 Prologis and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prologis and Extra Space Storage, you can compare the effects of market volatilities on Prologis 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 Prologis with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prologis and Extra Space.
Diversification Opportunities for Prologis and Extra Space
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prologis and Extra is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Prologis 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 Prologis 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 Prologis 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 Prologis i.e., Prologis and Extra Space go up and down completely randomly.
Pair Corralation between Prologis and Extra Space
Assuming the 90 days trading horizon Prologis is expected to generate 1.34 times less return on investment than Extra Space. But when comparing it to its historical volatility, Prologis is 1.94 times less risky than Extra Space. It trades about 0.12 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 23,376 in Extra Space Storage on September 13, 2024 and sell it today you would earn a total of 1,072 from holding Extra Space Storage or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Prologis vs. Extra Space Storage
Performance |
| Timeline |
| Prologis |
| Extra Space Storage |
Prologis and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prologis and Extra Space
The main advantage of trading using opposite Prologis and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prologis 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.| Prologis vs. Mitsubishi UFJ Financial | Prologis vs. Bread Financial Holdings | Prologis vs. Cognizant Technology Solutions | Prologis vs. SVB Financial Group |
| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fundo Investimento Imobiliario | Extra Space vs. LESTE FDO INV | Extra Space vs. Fras le SA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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