Correlation Between Urban Edge and Extra Space
Can any of the company-specific risk be diversified away by investing in both Urban Edge 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 Urban Edge and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Edge Properties and Extra Space Storage, you can compare the effects of market volatilities on Urban Edge 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 Urban Edge with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Edge and Extra Space.
Diversification Opportunities for Urban Edge and Extra Space
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Urban and Extra is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties 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 Urban Edge 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 Urban Edge Properties 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 Urban Edge i.e., Urban Edge and Extra Space go up and down completely randomly.
Pair Corralation between Urban Edge and Extra Space
Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 0.81 times more return on investment than Extra Space. However, Urban Edge Properties is 1.23 times less risky than Extra Space. It trades about 0.11 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.04 per unit of risk. If you would invest 1,301 in Urban Edge Properties on August 27, 2024 and sell it today you would earn a total of 994.00 from holding Urban Edge Properties or generate 76.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Urban Edge Properties vs. Extra Space Storage
Performance |
| Timeline |
| Urban Edge Properties |
| Extra Space Storage |
Urban Edge and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Edge and Extra Space
The main advantage of trading using opposite Urban Edge and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Edge 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.| Urban Edge vs. Saul Centers | Urban Edge vs. Site Centers Corp | Urban Edge vs. Kite Realty Group | Urban Edge vs. Retail Opportunity Investments |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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