Correlation Between Extra Space and Public Storage
Can any of the company-specific risk be diversified away by investing in both Extra Space and Public Storage 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 Extra Space and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extra Space Storage and Public Storage, you can compare the effects of market volatilities on Extra Space and Public Storage 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 Extra Space with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Public Storage.
Diversification Opportunities for Extra Space and Public Storage
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Extra and Public is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and Extra Space 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 Extra Space Storage are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Extra Space i.e., Extra Space and Public Storage go up and down completely randomly.
Pair Corralation between Extra Space and Public Storage
Assuming the 90 days trading horizon Extra Space Storage is expected to under-perform the Public Storage. In addition to that, Extra Space is 1.04 times more volatile than Public Storage. It trades about -0.14 of its total potential returns per unit of risk. Public Storage is currently generating about -0.12 per unit of volatility. If you would invest 35,855 in Public Storage on September 18, 2024 and sell it today you would lose (3,988) from holding Public Storage or give up 11.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Extra Space Storage vs. Public Storage
Performance |
Timeline |
Extra Space Storage |
Public Storage |
Extra Space and Public Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Extra Space and Public Storage
The main advantage of trading using opposite Extra Space and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage's long position.Extra Space vs. Zoom Video Communications | Extra Space vs. Team Internet Group | Extra Space vs. DFS Furniture PLC | Extra Space vs. American Homes 4 |
Public Storage vs. Cornish Metals | Public Storage vs. Zinc Media Group | Public Storage vs. Hochschild Mining plc | Public Storage vs. METALL ZUG AG |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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