Correlation Between Extra Space and Kohls

Can any of the company-specific risk be diversified away by investing in both Extra Space and Kohls 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 Kohls 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 Kohls, you can compare the effects of market volatilities on Extra Space and Kohls 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 Kohls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extra Space and Kohls.

Diversification Opportunities for Extra Space and Kohls

0.0

Correlation Coefficient

Extra Space  Kohls

Pay attention - limited upside

The 3 months correlation between Extra and Kohls is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Extra Space Storage and Kohls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohls 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 Kohls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohls has no effect on the direction of Extra Space i.e., Extra Space and Kohls go up and down completely randomly.

Pair Corralation between Extra Space and Kohls

If you would invest  24,528  in Extra Space Storage on October 1, 2024 and sell it today you would lose (528.00) from holding Extra Space Storage or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Extra Space Storage  vs.  Kohls

Extra Space Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Extra Space Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Extra Space is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kohls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kohls has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Extra Space and Kohls

The main advantage of trading using opposite Extra Space and Kohls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extra Space position performs unexpectedly, Kohls 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 Kohls will offset losses from the drop in Kohls' long position.

The idea behind Extra Space Storage and Kohls pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.