Correlation Between Public Storage and Extra Space
Can any of the company-specific risk be diversified away by investing in both Public Storage 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 Public Storage and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Storage and Extra Space Storage, you can compare the effects of market volatilities on Public Storage 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 Public Storage with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Storage and Extra Space.
Diversification Opportunities for Public Storage and Extra Space
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Public and Extra is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage 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 Public Storage 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 Public Storage 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 Public Storage i.e., Public Storage and Extra Space go up and down completely randomly.
Pair Corralation between Public Storage and Extra Space
Considering the 90-day investment horizon Public Storage is expected to generate 1.17 times more return on investment than Extra Space. However, Public Storage is 1.17 times more volatile than Extra Space Storage. It trades about 0.09 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.06 per unit of risk. If you would invest 33,661 in Public Storage on August 28, 2024 and sell it today you would earn a total of 1,122 from holding Public Storage or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Storage vs. Extra Space Storage
Performance |
| Timeline |
| Public Storage |
| Extra Space Storage |
Public Storage and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Storage and Extra Space
The main advantage of trading using opposite Public Storage and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Storage 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.| Public Storage vs. CubeSmart | Public Storage vs. National Storage Affiliates | Public Storage vs. Prologis | Public Storage vs. STAG Industrial |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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