Correlation Between United States and Extra Space
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Extra Space Storage, you can compare the effects of market volatilities on United States 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 United States with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Extra Space.
Diversification Opportunities for United States and Extra Space
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Extra is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and Extra Space go up and down completely randomly.
Pair Corralation between United States and Extra Space
Assuming the 90 days trading horizon United States is expected to generate 1.18 times less return on investment than Extra Space. In addition to that, United States is 1.16 times more volatile than Extra Space Storage. It trades about 0.06 of its total potential returns per unit of risk. Extra Space Storage is currently generating about 0.08 per unit of volatility. If you would invest 23,680 in Extra Space Storage on August 27, 2024 and sell it today you would earn a total of 872.00 from holding Extra Space Storage or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Extra Space Storage
Performance |
| Timeline |
| United States Steel |
| Extra Space Storage |
United States and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Extra Space
The main advantage of trading using opposite United States and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Companhia Siderrgica Nacional | United States vs. Fras le SA | United States vs. Clave Indices De | United States vs. BTG Pactual Logstica |
| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fras le SA | Extra Space vs. Clave Indices De | Extra Space vs. Telefonaktiebolaget LM Ericsson |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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