Correlation Between Power REIT and Extra Space
Can any of the company-specific risk be diversified away by investing in both Power REIT 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 Power REIT and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Extra Space Storage, you can compare the effects of market volatilities on Power REIT 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 Power REIT with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Extra Space.
Diversification Opportunities for Power REIT and Extra Space
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Extra is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Power 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 Power REIT 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 Power 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 Power REIT i.e., Power REIT and Extra Space go up and down completely randomly.
Pair Corralation between Power REIT and Extra Space
Allowing for the 90-day total investment horizon Power REIT is expected to generate 5.54 times more return on investment than Extra Space. However, Power REIT is 5.54 times more volatile than Extra Space Storage. It trades about 0.02 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.03 per unit of risk. If you would invest 399.00 in Power REIT on September 12, 2024 and sell it today you would lose (240.00) from holding Power REIT or give up 60.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Extra Space Storage
Performance |
| Timeline |
| Power REIT |
| Extra Space Storage |
Power REIT and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Extra Space
The main advantage of trading using opposite Power REIT and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT 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.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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