Correlation Between Plymouth Industrial and Extra Space
Can any of the company-specific risk be diversified away by investing in both Plymouth Industrial 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 Plymouth Industrial and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plymouth Industrial REIT and Extra Space Storage, you can compare the effects of market volatilities on Plymouth Industrial 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 Plymouth Industrial with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plymouth Industrial and Extra Space.
Diversification Opportunities for Plymouth Industrial and Extra Space
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Plymouth and Extra is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Plymouth Industrial REIT 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 Plymouth Industrial 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 Plymouth Industrial REIT 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 Plymouth Industrial i.e., Plymouth Industrial and Extra Space go up and down completely randomly.
Pair Corralation between Plymouth Industrial and Extra Space
Given the investment horizon of 90 days Plymouth Industrial REIT is expected to under-perform the Extra Space. In addition to that, Plymouth Industrial is 1.33 times more volatile than Extra Space Storage. It trades about -0.16 of its total potential returns per unit of risk. Extra Space Storage is currently generating about 0.06 per unit of volatility. If you would invest 16,746 in Extra Space Storage on August 27, 2024 and sell it today you would earn a total of 295.00 from holding Extra Space Storage or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plymouth Industrial REIT vs. Extra Space Storage
Performance |
| Timeline |
| Plymouth Industrial REIT |
| Extra Space Storage |
Plymouth Industrial and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plymouth Industrial and Extra Space
The main advantage of trading using opposite Plymouth Industrial and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plymouth Industrial 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.| Plymouth Industrial vs. Rexford Industrial Realty | Plymouth Industrial vs. EastGroup Properties | Plymouth Industrial vs. LXP Industrial Trust | Plymouth Industrial vs. First Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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