Correlation Between VICI Properties and Extra Space
Can any of the company-specific risk be diversified away by investing in both VICI Properties 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 VICI Properties and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VICI Properties and Extra Space Storage, you can compare the effects of market volatilities on VICI Properties 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 VICI Properties with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of VICI Properties and Extra Space.
Diversification Opportunities for VICI Properties and Extra Space
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VICI and Extra is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding VICI 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 VICI Properties 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 VICI 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 VICI Properties i.e., VICI Properties and Extra Space go up and down completely randomly.
Pair Corralation between VICI Properties and Extra Space
Given the investment horizon of 90 days VICI Properties is expected to under-perform the Extra Space. But the stock apears to be less risky and, when comparing its historical volatility, VICI Properties is 1.53 times less risky than Extra Space. The stock trades about -0.01 of its potential returns per unit of risk. The Extra Space Storage is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 16,746 in Extra Space Storage on August 27, 2024 and sell it today you would earn a total of 68.00 from holding Extra Space Storage or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VICI Properties vs. Extra Space Storage
Performance |
| Timeline |
| VICI Properties |
| Extra Space Storage |
VICI Properties and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VICI Properties and Extra Space
The main advantage of trading using opposite VICI Properties and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VICI Properties 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.| VICI Properties vs. Broadstone Net Lease | VICI Properties vs. Armada Hflr Pr | VICI Properties vs. Brightspire Capital | VICI Properties vs. Safehold |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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