Correlation Between Zegona Communications and Extra Space
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Extra Space Storage, you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Extra Space.
Diversification Opportunities for Zegona Communications and Extra Space
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zegona and Extra is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc 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 Zegona Communications 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 Zegona Communications Plc 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 Zegona Communications i.e., Zegona Communications and Extra Space go up and down completely randomly.
Pair Corralation between Zegona Communications and Extra Space
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 1.85 times more return on investment than Extra Space. However, Zegona Communications is 1.85 times more volatile than Extra Space Storage. It trades about 0.11 of its potential returns per unit of risk. Extra Space Storage is currently generating about -0.14 per unit of risk. If you would invest 30,600 in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of 1,800 from holding Zegona Communications Plc or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. Extra Space Storage
Performance |
| Timeline |
| Zegona Communications Plc |
| Extra Space Storage |
Zegona Communications and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and Extra Space
The main advantage of trading using opposite Zegona Communications and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. Catalyst Media Group | Zegona Communications vs. CATLIN GROUP | Zegona Communications vs. Tamburi Investment Partners | Zegona Communications vs. Magnora ASA |
| Extra Space vs. Hong Kong Land | Extra Space vs. Neometals | Extra Space vs. Coor Service Management | Extra Space vs. Fidelity Sustainable USD |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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